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:
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Company
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Yesterday's Gain
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NVIDIA (Nasdaq: NVIDIA )
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12.83%
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JA Solar (Nasdaq: JASO )
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12.50%
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Suntech Power
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10.79%
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McDermott International
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10.65%
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United States Natural Gas (NYSE: UNG )
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6.71%
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There's a reason I selected those notable gainers, as opposed to other winners making noise on Monday, like low-rated Sprint Nextel (NYSE: S ) . Stocks go up all the time, but unless you were able to predict the pop, what does it matter?
Our community of more than 145,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.
Written in the (five) stars?
For example, 95.6% of the 4,514 members who've rated Motley Fool Stock Advisor selection NVIDIA have a bullish opinion of the stock. Only a couple of months ago, one of those Fools, AA00971591, tapped the graphics-chip maker as the sharpest way to bet your chips:
Although companies like Intel (Nasdaq: INTC ) and AMD are now much more capable of producing products that compete with NVIDIA. I still like the name recognition of NVIDIA, it is associated with better graphics and better performance. That recognition isn't going away anytime soon even if other companies can make similar products.
Consistent with that call, shares of NVIDIA surged yesterday after chip giant Intel announced plans to scrap its much-ballyhooed Larrabee graphics chip after falling way behind on development.
The bullish lesson?
Don't be afraid to invest in what you know. As CAPS' AA00971591 understands, one of the easiest ways to gain an edge on Wall Street is by buying into the brands you really do believe in. In Peter Lynch's words, "So often we struggle to pick a winning stock, when all the while a winning stock has been struggling to pick us.
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:
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Company
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Yesterday's Loss
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Zale (NYSE: ZLC )
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24.40%
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China Automotive Systems
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7.29%
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Krispy Kreme Doughnuts
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6.51%
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Royal Bank of Scotland
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5.74%
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MGM Mirage (NYSE: MGM )
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4.07%
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While yesterday's drop in highly rated Allied Irish Banks may have caught our community off guard, low-ranked stocks are fully expected to fall hard.
Did CAPS call the fall?
Just two weeks ago, for instance, Motley Fool co-founder David Gardner (TMFBreakerDave) offered a particularly lackluster outlook for Zale: "I expect continued weakness from here for this moribund bricks-and-mortar operation. I like Blue Nile as a replacement business."
In line with that warning, shares of the jeweler plunged yesterday after reporting a nasty November same-store sales decline of 18.6% after Friday's close.
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. As hockey great Wayne Gretzky advises, "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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