Thursday's Biggest Stock Stars

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

Without further ado:

Company	Thursday's % Gain
Superior Energy Services (NYSE: SPN)	18.86
FMC Technologies (NYSE: FTI)	13.37
Sciele Pharma	11.39
Graham	11.16
Bolt Technology	10.51

There's a simple reason I selected the largest five-star gainers, as opposed to other big-name winners making noise on Thursday -- like Hoku Scientific (Nasdaq: HOKU). Stocks go up all the time, but unless you were able to predict the pop, what does it matter? 

Our community of 80,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proven its market-beating prowess: Over the last year, top-rated stocks have returned roughly 28%.

Written in the (five) stars?
For example, of the 265 All-Stars who've rated longtime CAPS favorite Superior Energy Services, just one has a bearish opinion. On the strength of that overwhelming support, the Louisiana-based oilfield services provider has kept a perfect five-star rating for more than six months straight.

This bull pitch -- by CAPS player SloanBuckman back in mid-April -- proved to be, uh, a superior sign of good things to come:

Strategically, the co. is perfectly positioned to benefit from the drillers' renewed emphasis on drilling the Gulf of Mexico. With the unrest in the Middle East, the oil companies will attempt to squeeze everything out of the Gulf, which is perfect for SPN. On a fundamental basis, earnings are solid, with 26% projected 5-year growth. The PEG is less than 0.4. ... The stock looks great on every dimension.

Superior Energy is up 14% since that call, and has returned an impressive 38% over the last year. In fact, yesterday's pop came after the company landed a major $750 million deal with BP (NYSE: BP), Chevron (NYSE: CVX), and Apache to clean up damaged rigs in the Gulf of Mexico -- perfectly consistent with SloanBuckman's take.

The bullish takeaway? When searching for stocks, don't be afraid to ask for it all. Screening for specific qualitative traits -- like a solid competitive advantage and strong industry tailwinds -- is certainly a good idea, but make sure the numbers (fundamentals) actually back up your assessment. As long as the price is cheap, too, giving you plenty of room for error, you may very well have a market-beater on your hands.

And now for the losers ...
Of course, winning isn't everything in the stock market.

Here are Thursday's biggest one-star decliners:  

Company	Thursday's % Loss
Lee Enterprises	18.59
Overstock.com	12.32
Media General	12.28
Hot Topic (Nasdaq: HOTT)	11.99
Hythiam	11.47

One-star stocks inspire the least confidence from our CAPS players. So while yesterday's drop in four-star stock Zumiez (Nasdaq: ZUMZ) may have caught our community off guard, one-star stocks are fully expected to fall hard. Over the last year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Did CAPS call the fall?
Take, for instance, this short (but sweet) Hot Topic bear call made in August 2006 by CAPS All-Star TMFLucky11:

Hot Topic's fallen out of favor with youthful consumers, and the change in trends will continue to put a significant dent in the company's bottom line.

The California-based retailer of teen "goth" apparel is down a depressing 64% since that pitch. In fact, yesterday's slide came after a Wall Street analyst lowered her quarterly sales forecast for the company -- in line with TMFLucky's long-held bearish beliefs.

The bearish lesson? Always be in tune with your customers. The retail apparel business is especially vulnerable to fickle consumer tastes, so if you plan to invest in this space, it's really important to keep up with what's "hot" and what's "not." By avoiding fringe retailers with unsustainable styles and brands long before Wall Street ever figures it out, it will be easier to keep your shirt on.  

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!