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 top ratings of four or five stars:
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Company
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Yesterday's Gain
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Ceragon Networks (Nasdaq: CRNT )
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14.55%
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American Eagle Outfitters (NYSE: AEO )
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8.88%
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Teck Resources
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8.38%
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Cliffs Natural Resources
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7.44%
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Yamana Gold (NYSE: AUY )
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6.53%
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There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, such as low-rated DryShips: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, 99.4% of the 491 All-Star members who've rated Motley Fool Hidden Gems pick Ceragon have a bullish opinion of the stock. In late March, one of those top Fools, tenmiles, explained why the wireless backhaul specialist was worth connecting to: "[Ceragon] looks attractive to me on both a fundamental and technical basis after collapse to around $4. Debt free with roughly 44% of current market cap in cash; network connectivity should rebound -- buy a 'grower" at a 'value" price for 3-5 [year] investment."
Ceragon is already up an impressive 134% since that call. In fact, yesterday's double-digit pop came after the company announced a significant equipment order from a North American WiMAX provider.
The bullish lesson?
Pay attention to small stocks that make a habit of landing big deals. Just a couple of major contract wins can have a huge impact on a small business, so focus on the market-leaders with massive industry trends working in their favor. If those tailwinds are strong enough, blockbuster deals will probably keep blowing in that company's direction.
And now for the losers ...
Of course, winning isn't everything in the stock market. Here are five of Thursday's biggest decliners with one- or two-star ratings:
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Company
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Yesterday's Loss
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Barnes & Noble (NYSE: BKS )
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11.55%
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Avis Budget
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5.76%
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AIG (NYSE: AIG )
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4.68%
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Saks
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4.47%
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Human Genome Sciences
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4.01%
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While yesterday's drop in highly rated UnitedHealth Group (NYSE: UNH ) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.
Did CAPS call the fall?
In August, for instance, CAPS member lordmorgul advised Fools to close the book on Barnes & Noble: "Lots of pressure from purely online and used book retailers, particularly Amazon.com (Nasdaq: AMZN ) , is really eating into the market here. Until people feel better about buying books at higher price intentionally [Barnes & Noble] is stagnant."
Consistent with that bearishness, shares of the book retailer plunged yesterday, after a disappointing same-store sales outlook raised fears that its recent acquisition of College Booksellers wouldn't help results as quickly as expected.
The bearish takeaway?
Always make sure the (business) trend is your friend. For market-beating returns, it's crucial that you position your portfolio to take advantage of massive shifts in commerce, rather than struggle against where the world is headed. In Wayne Gretzky's words, "Skate to where the puck is going, not to where it's been."
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!
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