Monday's Biggest Stock Stars

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

Without further ado:

There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Monday, like one-star stock General Motors (NYSE:GM). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 130,000 CAPS Fools considers its five-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 99% of the 1,027 members who've rated MVC Capital have a bullish opinion of the stock. Two weeks ago, one of those Fools, Northville, cited the business development company's value-centric CEO, Michael Tokarz, as the main reason to buy in:

I'm placing my faith in Tokarz on this one. They currently have money to invest during this down market and have recently announced a partnership with several Chinese firms to invest in the China region. Currently trading for approx 1/2 stated book value (admittedly stated by MVC, not free markets), I like this as a long term play.

Consistent with that call, shares of MVC surged yesterday after the company's net asset value held up surprisingly well over the first quarter, given the "difficult challenges for most industries and businesses."

The bullish lesson?
When times get tough, one of the best investments you can make is in the best investors. As CAPS' Northville understands, brilliant capital allocators thrive on major downturns, so it's never a bad idea to let them do the bargain-hunting for you. Like Tokarz himself said in yesterday's press release, "Given the overall performance of the MVC portfolio, our strategy of focusing on stable, growing companies and our conservative capitalization, we believe we are positioned for the future."

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

Here are five of Monday's biggest one-star decliners:   

While yesterday's drop in highly rated Aflac (NYSE:AFL) may have caught our community off-guard, one-star stocks are fully expected to fall hard.

Did CAPS call the fall?
Late last week, for instance, CAPS member TSIF sang a bearish tune about Warner Music:

Warner Music Group's label portfolio is huge and has some value, but this company doesn't seem to know how to tap into it. Quarterly losses continue to mount and with a cash/debt of 1:4, that's just not sustainable.

With the help of yesterday's drop, shares of the music recording and publishing company are already down 19% since that call.

The bearish takeaway?
Never confuse a one-day pop with a multiyear trend. As CAPS' TSIF understands, if a company's business model, management decisions, and financial position are notoriously shaky, short-term run-ups can be sustained for only so long. In the words of Benjamin Graham, "In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

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, above all else, 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!