Thursday's Biggest Stock Stars

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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:

Company	Yesterday's Gain
Fomento Economico Mexicano (FEMSA) (NYSE: FMX)	16.69%
Constellation Brands	5.41%
Accuray	2.31%
Walgreen (NYSE: WAG)	1.92%
Landec	1.56%

There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, like low-rated Time Warner (NYSE: TWX): Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 140,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 97.5% of the 523 members who've rated Motley Fool Global Gains selection FEMSA have a bullish opinion of the stock. Last year, one of those Fools, NotJesseL, explained why the Mexican beverage giant seemed perfect for parched portfolios:

Mexico, land of tienda's and soda pop. Population is growing and growing richer. This company sells pop and beer and runs some 600 stores ... Looks like a winner to me. Don't fret the volatility on this one, Mexican stocks are generally more volatile.

Since that pitch was written, the number of convenience stores has increased by quite a bit. Consistent with that call, shares of FEMSA surged yesterday, on news that it is considering the sale of its beer business to either SABMiller or Heineken. The company reportedly wants to focus on its soft-drink and convenience-store segments.

The bullish lesson?
Learn to think like a business owner, not a stock trader. All sorts of noise can swing a stock violently, but true investors can focus on the factors that really count over time. As CAPS' NotJesseL understands, by buying into well-established brands domiciled in growing markets, and at reasonable prices, you give yourself plenty of "upside" opportunities -- including getting bought by one of the big boys -- to earn an outsized return.

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:   

Company	Yesterday's Loss
MGM Mirage (NYSE: MGM)	11.05%
Sealy	10.63%
PMI Group	9.41%
Las Vegas Sands (NYSE: LVS)	8.25%
Citigroup (NYSE: C)	6.40%

While yesterday's drop in highly rated E*TRADE (Nasdaq: ETFC) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Just last week, for instance, CAPS All-Star DarthMaul09 presciently advised MGM bulls to quickly cash in their chips:

MGM is like [Las Vegas Sands] but without the hope of a China bail out. They went out on a speculative limb with the City Center project. The recent market rise raised hopes, which will likely fall quickly if the current correction persists for more than a week.

Following yesterday's double-digit drop, shares of the casino operator are down 13% since that warning.

The bearish takeaway?
Never confuse a junk rally for improving fundamentals. When all stocks are soaring, it's easy to become complacent as an investor. But you'll need to make sure you're on firm footing, so that you won't be surprised when Mr. Market inevitably turns.

As Warren Buffett reminds us, "In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond."

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 become a more Foolish investor.

Log in to CAPS today and start participating. It's absolutely free -- and a lot of fun!