Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Wednesday's biggest winners among the stocks with top ratings of four or five stars:
|
Company
|
Yesterday's Gain
|
|
Pacer International (Nasdaq: PACR )
|
28.71%
|
|
Deere (NYSE: DE )
|
5.02%
|
|
Mahindra Satyam (NYSE: SAY )
|
4.30%
|
|
Gilead Sciences (Nasdaq: GILD )
|
3.80%
|
|
ING Groep (NYSE: ING )
|
3.79%
|
There's a reason I selected those notable gainers, as opposed to other winners making noise on Wednesday, like one-star homebuilder Hovnanian Enterprises. 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, 94% of the 141 All-Star members who've rated Pacer International have a bullish opinion of the stock. Just two weeks ago, one of those top Fools, Grijandel, explained why the third-party logistics provider looked like a nice pick for the long haul:
This company is selling for a ridiculously low Price/Sales ratio. In the short term they have already stopped the operating losses and their balance sheet is sound. On a recovery of the business, this stock will be worth several times its current price.
Consistent with that call, shares of Pacer skyrocketed over 25% yesterday after the company swung to a quarterly profit, and said it expects to be cash flow positive by year-end.
The bullish lesson?
Always be on the hunt for stocks priced for imperfection. It's virtually impossible to call a stock's "bottom," but if you're confident that the risks are already baked into the price, there's a good chance your investment will turn out well over time. As Warren Buffett reminds us, "Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."
And now for the losers ...
Of course, winning isn't everything in the stock market.
Here are five of Wednesday's biggest decliners with one- or two-star ratings:
|
Company
|
Yesterday's Loss
|
|
Red Robin Gourmet Burgers (Nasdaq: RRGB )
|
4.82%
|
|
Harmony Gold Mining
|
3.79%
|
|
Boyd Gaming
|
3.36%
|
|
Allied Nevada Gold
|
3.31%
|
|
Origin Agritech
|
2.82%
|
While yesterday's drop in highly rated miner Coeur d'Alene Mines (NYSE: CDE ) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.
Did CAPS call the fall?
Two years ago, for instance, CAPS member Forecaster1 tapped Red Robin as a rather unappetizing opportunity:
This company grew too fast too soon. ... Attach this to the problems of $9-$10 6 oz. burgers, lower priced competition raging in the burger market, down turning economy and you have a recipe (no pun intended) for disaster. I'll admit that I like their fries, but there is not much else on the menu outside of burgers that looks very appealing (window dressing) and as I said the price is outrageous for a 6oz.(I asked) burger.
Including yesterday's market-bucking loss, shares of the casual dining restaurant are down over 46% since that call.
The bearish takeaway?
Trust your own eyes above all else. Just as it might pay to "buy what you know" (and enjoy), it's probably a good idea to stay away from stocks whose products you aren't particularly fond of. Due diligence is always required, but if you're not a satisfied customer, it might be a stretch to think you'll be a satisfied investor.
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!
RSS Headlines
Fool UK