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 low-rated casino stocks Las Vegas Sands 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 145,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 96% of the 995 members who've rated North American Palladium have a bullish opinion of the stock. Late last year, one of those Fools, ablengata, identified the stock as a particularly solid selection:

Palladium is a dear precious industrial metal. It doesn't only hold intrinsic value like gold, it has "logical" value in the fact that palladium and platinum have some very important and special chemical properties. ... [Platinum group metals] are very important for the green revolution, and I see this stock only going up long term!

Including yesterday's surge, shares of the Canadian miner have already risen by more than 70% since that call.

The bullish lesson?
Learn to pounce on Mr. Market's short-sightedness. Going against the herd is never easy, but if you truly believe in a company's long-term tailwinds, significant downturns offer the very best opportunity to buy. As Warren Buffett once said:

Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.

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 highly rated American Capital may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Last month, for instance, CAPS member JackCaps brought Gannett's shrinking sales to our community's attention:

Gannett has yielded the following gross revenues in recent years: $8.0B (2006), $7.4B (2007), $6.8B (2008), and 2009 looks to be no more than $5.9B. Do you see a trend? Back in 2008, Gannett took a whopping $8.0B non-recurring expense for restructuring. Look for more of these expenses in the future. Even Phil Jones could not "hide the decline" at Gannett.

In line with that warning, shares of the nation's largest newspaper publisher sank yesterday after a gloomy outlook overshadowed a market-topping fourth-quarter report.

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 retire wealthy.

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