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

Without further ado:


Yesterday's Gain

FARO Technologies (Nasdaq: FARO)


Amtech Systems


Bolt Technology (Nasdaq: BOLT)


CRM Holdings (Nasdaq: CRMH)


Anika Therapeutics (Nasdaq: ANIK)


There's a simple reason why I selected the largest five-star gainers, as opposed to other big-name winners making noise on Thursday, like low-rated Comcast (Nasdaq: CMCSA). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?

Our community of more than 83,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proven its market-beating prowess: over the last year, top-rated stocks have returned roughly 28%.

Written in the (five) stars?
For example, of the 101 CAPS All-Stars who've rated measuring-equipment maker FARO Technologies so far, only four have a bearish opinion. Fueled by that Foolish support, the stock has kept a four- or five-star rating for more than six months straight.

This outperform pitch, by our own Motley Fool Hidden Gems analyst TMFPlatoish back in 2006, helped bring FARO's turnaround opportunity to CAPS:

A seemingly unending string of operational missteps have hammered the stock price ... My belief is still that this was a classic example of a small company confronting an exploding market without a management team in place with the skills and capabilities to handle and control the growth. New blood seems to be getting the operational ducks lined up and we'll see how it goes.

And did it ever "go": FARO is up 131% since that call. In fact, yesterday's pop came after management posted fourth-quarter sales growth of 25.7%, while doubling the company's EPS -- in line with Platoish's bullish prediction.

The bullish takeaway?
The quality of a company's management team can often predict how well it will perform as an investment. One of the most overlooked aspects of investing is identifying a competent management team that will take advantage of huge market opportunities. After all, you can have the fastest horse in the world, but if the jockey stinks, your odds of making money fall sharply.   

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

Here are Thursday's biggest one-star decliners:  


Yesterday's Loss

Corinthian Colleges


Raser Technologies (NYSE: RZ)


Trubion Pharmaceuticals


CBRE Realty Finance


Kosan Biosciences


One-star stocks inspire the least confidence from our CAPS players. So while yesterday's drop in five-star stocks NVIDIA (Nasdaq: NVDA) and Netgear may have caught our community off-guard, one-star stocks are fully expected to fall hard. Over the last year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Did CAPS call the fall?
Just a few weeks ago, for instance, CAPS All-Star IBDFool4U ran some numbers on Raser Technologies:

Raser is set to run out of cash in 1 yr. Assuming NO cost of sales (which is unrealistic), they would have to sell $15 million of licenses this year to simply break even. To justify current market cap at a reasonable P/E of 20, they would have to make $35 million this year (Again, assuming no cost of sales). That's a lot to expect from selling licensing fees in a competitive market.

Shares of the green-focused technology licensing company are down 16% since that call, and are off 50% from the highs set in December.

The bearish lesson?
Implicit in a company's stock price are very specific cash flow assumptions. Therefore, one of the most important jobs you have as investor is to determine whether they're justified. As IBDFool4U mentioned, any company can pop in the short term, but if the expectations aren't rooted in economic reality, it's just a matter of time before your rocket stock "turns torpedo."

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

NVIDIA and Netgear are recommendations of Motley Fool Stock Advisor. Check out our latest stock recommendations with a no-obligation 30-day free trial.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy is always the big winner.