Thursday's Biggest Stock Stars

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Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Thursday's biggest winners among the stocks with a top rating of four or five stars.

Without further ado:

Company	Yesterday's % Gain
Cameco (NYSE: CCJ)	7.77%
Peabody Energy	6.06%
Alcoa (NYSE: AA)	5.79%
Southern Copper (NYSE: PCU)	4.65%
Chesapeake Energy (NYSE: CHK)	3.21%

There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, like low-rated casino stocks Las Vegas Sands (NYSE: LVS) and MGM Mirage: Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 135,000 CAPS Fools considers its "high-star" stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 98% of the 473 All-Star members who've rated Cameco have a bullish opinion of the stock. In late February, one of those top Fools, nrlbuild, singled out the stock as a rather atomic opportunity:

In the long run nuclear power will become more prolific as the world seeks for alternatives to fossil fuels. The stability of uranium prices via the long contract period is a known quantity which can be planned around. They are the world's largest uranium miner.

Shares of Cameco have risen by an amazing 119% since that pitch. In fact, yesterday's pop came a day after it posted better-than-expected quarterly profits and boosted its full-year revenue outlook to boot -- consistent with nrlbuild's bull call.

The bullish lesson?
Learn to be long-term greedy when others are short-term fearful. Going against the herd is never easy, but if you truly believe in a company's long-run trends, then significant slowdowns offer the very best opportunities to buy. As Warren Buffett reminds us: "Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."

And now for the losers ...
Of course, winning isn't everything in the stock market.

Here are five of Thursday's biggest decliners with a one- or two-star rating:   

Company	Yesterday's % Loss
Trina Solar	8.55%
Advance Auto Parts (NYSE: AAP)	5.17%
American Axle	4.94%
D.R. Horton	3.72%
99 Cents Only Stores	3.52%

While yesterday's drop in highly rated NetEase (Nasdaq: NTES) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
In February, for instance, CAPS All-Star SwordAgain warned that Advance Auto's stock was advancing at dangerously high speeds:

Overwhelming positive sentiment. … All of it based on a premise. Namely, that a slowing economy and declining sales in new autos will cause a strong rise in sales of used auto parts. … Many repairs are discretionary if you are short of cash. You can delay repairs to many items and still drive your car. … They have disappointed before. But now is a special time. Because now -- they are [set up] for a fall.

Consistent with that bear call, shares of Advance Auto fell yesterday after posting paltry quarterly sales growth of 0.7% for the do-it-yourself side of the business.

The bearish takeaway?
Implicit in a stock's price are very specific growth and risk assumptions. Therefore, it's your job as an investor to assess whether those beliefs are reasonable, given the company's business model and outlook. As Buffett warns, "Investors making purchases in an overheated [stock] need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid."

The final Foolish move
Investors often focus strictly on stock price movements without realizing that developing a proper stock-picking process counts most.

Over at Motley Fool CAPS, thousands of investors are Foolishly sharing insightful investment tips to help, above all else, identify tomorrow's big movers. Over time, consistently reverse-engineering winning -- and losing -- stocks will help you become a more Foolish investor.

Log in to CAPS today, and start participating. It's absolutely free -- and a lot of fun!