Thursday's Biggest Stock Stars

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:

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

Our community of more than 150,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 98% of the 1,562 All-Star members who've rated Motley Fool Stock Advisor selection Activision Blizzard have a bullish opinion of the stock. Last month, one of those top Fools, raptor69357, explained why the video game publisher looked like a fun way to profit:

It's time to buy this stock. In fact it was time to buy it at $9 however $11 is not too late. For those not cognizant of the industry, [Activision] has a plethora of product on the cusp of release. Nerds can care less about the recession. ... When Diablo III, WOW Cataclysm, and StarCraft II are released, allowances worldwide will be plundered and reallocated to my stock portfolio.

Consistent with that call, shares of Activision surged yesterday after the company reported better-than-expected quarterly results and issued a dividend for the first time.

The bullish lesson?
The simplest reasons to buy a stock are often all you need to make money. As CAPS' raptor69357 understands, when a company owns such wildly popular brands as Activision does and is available at a reasonable price, it's really not necessary to overthink the investment. Like Peter Lynch reminds us, "Never invest in any idea you cannot illustrate with a crayon."

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:

While yesterday's plunge in highly rated Sierra Wireless may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
About two years ago, for instance, CAPS All-Star wsubora brought Alcatel-Lucent's marital stress to our community's attention:

Alcatel-Lucent continues to struggle with the merger consolidation. Costs are still not under control and the management bent seems to be shed people to keep profitability almost there. There are some positives in the VOIP arena, but the major carriers are still being tight fisted with their capital $$and [Alcatel-Lucent] is feeling this pain on the bottom line.

Not surprisingly, shares of the telecom equipment maker are down over 60% since that call. In fact, yesterday's double-digit plunge came after the company posted a quarterly revenue decline of 19.9% and said its turnaround plan may take longer than expected.

The bearish takeaway?
Stay away from deals that are doomed to disappoint. Some of the good reasons for a merger include gained economies of scale, use of complementary resources, and the elimination of operating inefficiencies. But as CAPS' wsubora demonstrates, if you ever come across a deal with none of the above, it's probably best to keep your distance.

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!