Monday's Biggest Stock Stars

We at the Fool usually don't pay attention to day-to-day price gyrations. We prefer to track each business' intrinsic value, which, by its very nature, changes a lot less frequently than Mr. Market's wild swings would have you believe.       

But some price moves are just so big that investors should at least take notice -- especially when we Fools could have seen them coming.  

The big winners   
With that in mind, I've summoned our Motley Fool CAPS community to highlight yesterday's biggest gainers among the stocks with a top rating of five stars.

Without further ado:


% Gain

TBS International (Nasdaq: TBSI  )


New Oriental Education & Technology Group (NYSE: EDU  )


Aegean Marine Petroleum Network


China Petroleum & Chemical (NYSE: SNP  )


PetroChina (NYSE: PTR  )


The reason I selected the biggest five-star gainers, as opposed to some of the largest overall winners -- like Tektronix (NYSE: TEK  ) and BioFuel Energy (Nasdaq: BIOF  ) -- is simple. Stocks go up all the time, but unless you were able predict the pop, what does it matter?    

Through a consensus of more than 65,000 Fools in CAPS, our community considers its five-star stocks the most likely to outperform the market. By reverse-engineering some of the arguments made for these picks, our odds of finding the next big winner will surely improve.  

Did CAPS predict the pop?
For example, New Oriental Education, a Beijing-based provider of educational services, has had more than 500 CAPS players make an "outperform" call on its stock, while 33 have been bears.  

This outperform pitch -- written by CAPS All-Star tuffsledding last September -- gives us a glimpse into our community's thinking:  

Fast growing private education company in China. Enormous growth potential likely justifies the high P/E. Dominant company in a rapidly growing industry in the fastest growing economy justifies a bit of a premium IMHO. Volatility is expected, but long-term rewards likely justify some bumps in the road.

Since that call, EDU has returned 31%. More impressive is the stock's monstrous 97% gain since it was formally pitched to Motley Fool Global Gains subscribers last February.

The bullish takeaway? A high price-to-earnings ratio (P/E) doesn't necessarily mean that a stock is expensive. As long as you're confident that the expectations built into a stock are reasonable, then your "high" P/E stock may actually provide a bargain opportunity.

In fact, yesterday's pop came after the company blew analyst expectations out of the water, reporting quarterly revenue and net income growth of 42.5% and 55%, respectively. So far, at least, EDU's growth rates have more than lived up to its price.

Now for the losers
Of course, winning isn't everything in the stock market. Stocks go down, too -- often very, very fast.

Here are yesterday's biggest one-star decliners:   


% Loss



Advanced Battery Technologies




Midway Games


BankUnited Financial


One-star stocks inspire the least confidence from our CAPS community. By investigating a few of the bearish arguments made for these losers, we'll have a better chance of averting portfolio disaster in the future.   

Did CAPS call the fall?
Take, for instance, this underperform pitch found on PRIMEDIA's CAPS page:

Revenues have fallen close to 50% since 2001. In the short term, advertising revenues are falling because apartments currently have high occupancy numbers, and the market is shrinking as more apartments are converted to condos. Also, the company is seeing less advertising from homebuilders and fewer new homes to sell.    

The New York publisher of free consumer guides (cars, apartments, and new homes) is down 39% since MylesPatrick penned that pitch last July. In fact, yesterday's drop was the result of reduced ad spending (as a result of the U.S. housing woes), prompting management to lower its 2007 forecast. You know, just like MylesPatrick had warned.

The bearish lesson? Struggling sectors never operate on an island. Therefore, make sure you're aware of all the industries that directly affect your companies. If just one of your stocks happens to be extremely leveraged to a sector in crisis, your portfolio is probably in for an unwanted surprise.

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. It's absolutely free -- and a lot of fun! 

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Related Tickers

10/25/2016 1:09 PM
EDU $53.16 Up +4.73 +9.77%
New Oriental Educa… CAPS Rating: **
PRM.DL2 $0.00 Down +0.00 +0.00%
PRIMEDIA, Inc. CAPS Rating: *
PTR $72.18 Down -1.04 -1.42%
PetroChina CAPS Rating: ***
SNP $75.64 Down -0.70 -0.91%
China Petroleum an… CAPS Rating: **