Monday's Biggest Stock Stars

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

There's a reason I selected those notable gainers as opposed to other winners making noise on Monday, like one-star stock AIG (NYSE:AIG): Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 140,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 99% of the 347 All-Star members who've rated Syneron have a bullish opinion of the stock. In February, one of those top Fools, StKitt, jumped on the cosmetic-laser company's sharp drop: "Good long call on big dip today. No debt and a good cash position make this one look like a survivor."

Shares of Syneron have nearly doubled since that call. In fact, Syneron surged for the second straight session yesterday after a Wall Street analyst upgraded the stock on expectations of a recovery for the laser cosmetic market.

The bullish lesson?
Learn to pounce on Mr. Market's shortsightedness. Going against the herd is never easy, but if you truly believe in a company's long-term tailwinds, significant slowdowns offer the very best time to buy. As Warren Buffett quips, "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."

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

Here are five of Monday's biggest decliners with one- or two-star ratings:   

While yesterday's drop in five-star stock Cemex may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Two weeks ago, for instance, CAPS All-Star brightsideLP decided to slap a downgrade on Moody's. Here's an excerpt:

[Moody's] has a liquidation value of around -$5 per share not counting any of this litigation, diminished credibility, and rapidly decreasing prospects for future revenues (let alone earnings). Massive debt, loss of economic moat, unethical-untrustworthy-incompetent management, and now litigation out their ears. I ask you again -- what reason would you want to own this security?

Following yesterday's drop, shares at the embattled credit rating agency are already down 22% since that call.

The bearish takeaway?
Learn to regulate your regulatory risks. Investing in high-return oligopolies can be wise, but if public sentiment ever turns against your business, a change in regulation could dramatically hurt its ability to stay strong. As CAPS' brightsideLP understands, unless you're willing to consider all of the possible ways your stock might get killed -- both in the short and the long run -- there's a good chance you'll wake up one day and get blindsided.

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 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!