Wednesday's Biggest Stock Stars

Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight Wednesday's biggest gainers among the stocks with a top rating of five stars.

Without further ado:

Company

Yesterday's % Gain

Silver Wheaton (SLW)

11.96%

Kinross Gold (NYSE: KGC  )

9.51%

AXT (Nasdaq: AXTI  )

8.87%

Silver Standard Resources (Nasdaq: SSRI  )

8.13%

Compania de Minas Buenaventura (NYSE: BVN  )

7.56%

There's a simple reason why I selected the largest five-star gainers, as opposed to other big-name winners making noise on Wednesday, such as solar stocks Akeena Solar (Nasdaq: AKNS  ) and LDK Solar (LDK). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?   

Our community of more than 79,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proved its market-beating prowess: Over the past year, the top-rated stocks CAPS have returned roughly 28%.

Written in the (five) stars?
For example, of the 202 CAPS All-Stars who've rated Kinross Gold, a whopping 98.5% of them are bullish. And on the strength of that Foolish support, the Toronto-based gold miner has maintained either a four- or five-star rating for more than six months straight.

This bull pitch -- by CAPS All-Star TkNeo in late April -- gave our community some useful insider insight:

If you want a management for your money it has to be KGC's. I found this after thoroughly reading the 2006 Annual Report. Passionate towards growth and cost savings. Everything centered around core operations. Recent Bema acquisition is just the beginning. Of course, like other gold mining companies this is leveraged to the price of gold. But if you want to invest in gold, it better be Kinross.

Kinross is up 48% since that call, and it returned a lustrous 55% in 2007.  

The bullish takeaway? Never underestimate the importance of having a high-quality management team. After all, the managers are the ones you've essentially hired to run your business and generate an above-average return. Investing is all about stacking the odds in your favor, and betting on a truly committed jockey is one of the best ways to do that.  

And now for the losers ...
Of course, winning isn't everything in the stock market. Here are Wednesday's biggest one-star decliners.   

Company

Yesterday's % Loss

U.S. Auto Parts (PRTS)

13.56%

NL Industries (NL)

12.77%

Protherics (PTIL)

11.45%

Credit Acceptance (CACC)

10.50%

UAL (Nasdaq: UAUA  )

10.29%

One-star stocks inspire the least confidence among our CAPS players. So while yesterday's drop in five-star stock SK Telecom (NYSE: SKM  ) may have caught our community off guard, one-star stocks are fully expected to fall hard. Over the past year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Did CAPS call the fall?
Take, for instance, this UAL bear call -- by CAPS player JaegerGator -- early last August:

They may have had a short term recovery recently, but United has some serious problems and shortcomings in a competitive and tough sector. Despite some improvements and good ideas (including Economy Plus) their customer service and efficiency still leaves something to be desired which is going to hurt them over the long haul. They're in trouble.

Shares of the Chicago-based parent company of United Airlines have fallen 27% since that pitch and nearly 35% over the past three months. In fact, yesterday's drop was part of an airline sector sell-off sparked by surging oil prices.  

The bearish lesson? Stay away from exceptionally cutthroat sectors. Though we Fools don't necessarily advocate a "top-down" approach, let's face it: It's a lot easier to make money in some industries than in others. And as Warren Buffett has said many times, the airline business is certainly not one of them.

The final Foolish move
Investors often focus strictly on stock-price movements -- or the results -- 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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