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:
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Company
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Yesterday's Gain
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Sutor Technology (Nasdaq: SUTR )
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21.75%
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USG
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8.40%
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Manitowoc (NYSE: MTW )
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7.28%
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General Electric (NYSE: GE )
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5.18%
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UnitedHealth (NYSE: UNH )
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3.84%
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There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, like one-star stock Sears Holdings (Nasdaq: SHLD ) . Stocks go up all the time, but unless you were able to predict the pop, what does it matter?
Our community of more than 145,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.
Written in the (five) stars?
For example, 99% of the 172 All-Star members who've rated Sutor have a bullish opinion of the stock. Three months ago, one of those top Fools, WPThatcher, brought the company's steely resolve to our community's attention: "Sutor is a Chinese steel maker. It is cheaply valued (PEG of less than 1) and has high insider ownership (insiders own about 80%). They are somehow remaining profitable during a very difficult time for the steel industry."
Consistent with that call, shares of Sutor surged over 20% yesterday after landing four new contracts worth roughly $25 million in total to supply 31,800 metric tons of galvanized steel coils.
The bullish lesson?
Learn to combine the best of both small-cap and global investing strategies. By buying into proven small-caps domiciled in attractive foreign markets, you earn the double benefit of owning a business that has plenty of room to rocket, while getting paid in non-U.S.-denominated cash flows. As long as you're cognizant of price, international small caps offer a great way to play both offense and defense.
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:
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Company
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Yesterday's Loss
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Abercrombie & Fitch (NYSE: ANF )
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9.78%
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Hot Topic
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8.22%
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Bebe Stores
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7.95%
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Gap
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3.66%
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Yahoo! (Nasdaq: YHOO )
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2.74%
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While yesterday's loss in highly rated Cognizant Technology 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 assistryan warned that Abercrombie was wearing out:
A few years ago, everyone was wearing [Abercrombie] clothes. ... Now take a look around. I can't remember the last time I saw someone wearing [Abercrombie] clothing. Budgets are getting tighter and tighter. People just do not have the extra cash to spend. ... This stock is just way overvalued for the near term.
Consistent with that warning, shares of the teen apparel retailer plunged yesterday after reporting a December same-store sales decline of 19% -- well below analyst expectations.
The bearish takeaway?
Implicit in a stock's price are very specific growth and risk assumptions. Therefore, it's your job as an investor to assess whether those assumptions are reasonable, given the company's competitive outlook going forward. As Warren Buffett reminds us, "The investor of today does not profit from yesterday's growth."
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!
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