Thursday's Biggest Stock Stars

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:

There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, like one-star stock priceline.com (NASDAQ:PCLN). 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, 97.6% of the 1,701 members who've rated ABB have a bullish opinion of the stock. Late last year, one of those Fools, CottonSwab, highlighted the trends working in the stock's favor. Here's an excerpt:

ABB derives business from both emerging industrial economies and developed industrial economies. Over the long run, demand for these products and services should remain strong. While ABB has many competitors, ABB is a leading market share in most of its primary business sectors. ABB is also one of only a few companies that have the size to execute mega-infrastructure projects.

Consistent with that call, shares of Swiss engineering group surged yesterday after its fourth-quarter profit more than doubled on lower inventory levels, among other items.

The bullish lesson?
Learn to pounce on Mr. Market's shortsightedness. Going against the herd is never easy, but if you truly believe in a company's long-term tailwinds, significant slowdowns offer the very best time to buy. As Warren Buffett reminds us, "Your goal as an investor should be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now."

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:   

While yesterday's drop in highly rated NVIDIA (NASDAQ:NVDA) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Just last month, for instance, CAPS member DarthMaul09 strongly advised Fools to fold their Las Vegas casino holdings:

There is still a lot of optimism concerning the casino stocks, especially in [Nevada], where the economy has not really recovered enough to justify the hope. ... If we have a significant correction, then a further drop in travel and vacation spending will further hurt revenue at a time when this company needs to raise cash to support their building projects.

Consistent with that call, shares of MGM Grand and Las Vegas Sands sank yesterday after they both posted disappointing quarterly results on continued weakness in the Las Vegas area.

The bearish takeaway?
Get out of dangerous neighborhoods while you can. Just as companies with very little product diversification should give Fools some pause, those that are overly exposed to just a few geographic regions should cause concern. When things are booming, geographic risk might seem trivial, but as DarthMaul09 understands, any material troubles in those areas could seriously hurt investors.

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!