Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Wednesday's biggest winners among the stocks with a top rating of five stars:
|
Company |
Yesterday's % Gain |
|---|---|
|
Lundin Mining |
37.73% |
|
Silver Standard Resources |
31.85% |
|
Silver Wheaton |
25.09% |
|
Kinross Gold |
22.03% |
|
Yamana Gold |
16.14% |
There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Wednesday, like low-rated casino stocks Las Vegas Sands
Our community of more than 120,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proved its market-beating prowess: In the first 20 months since its inception in late 2006, five-star stocks beat the market by 12 points, annualized.
Written in the (five) stars?
For example, 93% of the 90 All-Star members who've rated Silver Standard Resources have a bullish opinion of the stock. Last week, one of those All-Stars, Vanheezy18, explained why the Canadian miner -- along with another silver company -- seemed like an attractive bet for the long run:
I believe in buying [Silver Standard Resources] and [Silver Wheaton] now. Silver unlike gold for the most part is consumed in electronics (which are being produced now like never before) so if you're in it for the long haul (and I am) look for there to be a huge demand for silver in the next 10-20 years.
Consistent with that call, shares of several five-star silver stocks surged yesterday, as precious-metal prices rallied as the Fed decided to once again cut rates.
The bullish lesson?
Learn to make money in metals. There are plenty of paths to investment heaven, and buying into well-managed, reasonably priced miners of precious metals has historically been an effective hedge against rising inflation, a declining dollar, and general market mania. As long as you're willing to stomach the inherent volatility of precious-metals prices, there may be a silver lining out there for you, too.
And now for the losers ...
Of course, winning isn't everything in the stock market.
Here are five of Wednesday's biggest one-star decliners:
|
Company |
Yesterday's % Loss |
|---|---|
|
VeraSun Energy |
53.33% |
|
Vocus |
24.12% |
|
Sulphco |
16.05% |
|
UAL |
13.79% |
|
AMR |
9.13% |
While yesterday's plunge in highly rated Manitowoc
Did CAPS call the fall?
In May, for instance, CAPS All-Star YeahBuddy79 shared this bearish view on VeraSun Energy:
Is there anything Ethanol Fuel can't do? Oh yeah how about make a dollar. This company is sick. Ethanol is a dream and a dumb one at that. Watering down gas wont save the economy or planet. The amount of crop needed to make Ethanol renders it almost useless. Ethanol alone will not meet the demand for fuel in the United States.
Consistent with YeahBuddy79's skeptical stance, shares of VeraSun lost more than half of their value yesterday. According to the AP, shares slid after "a report surfaced that the ethanol producer is looking into filing for Chapter 11 bankruptcy."
The bearish takeaway?
Don't believe the hype. As CAPS' YeahBuddy79 understands, alternative energy plays like ethanol fuel may sound exciting, but without solid evidence of long-term economic feasibility, it would be tough to classify them as prudent investments. Like Charlie Munger once candidly put it, "Running cars on corn is about the stupidest thing I ever heard of. Our government is under tremendous political pressure [to support corn ethanol], even though it makes no sense."
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!
