Wednesday's Biggest Stock Stars

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.

Without further ado:

There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Wednesday. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

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, 97% of the 552 CAPS members who've rated AECOM have a bullish opinion of the stock. Last month, one of those Fools, Hoping2Retire, explained why the provider of construction services seemed particularly well-positioned:

There will be significant pressure for new infrastructure project investments in US and Europe to reduce unemployment in the next several years. Additionally Asia will continue its massive investments in this area and, accordingly, architecture and engineering firms should do well.

AECOM is beating the market by 30% since that call.

The bullish lesson?
Pay attention to smaller companies that make a habit of landing global deals. Just a few key contract wins can have a big impact on the bottom line, so focus on the reputable ones with big-industry trends working in their favor. If those tailwinds are strong enough, major contracts will likely continue to blow in that company's direction.

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:  

While yesterday's plunge in five-star stock CapitalSource (NYSE:CSE) may have caught our community off-guard, one-star stocks are fully expected to fall hard: Over the 20 months since CAPS started, one-star stocks dropped an average of 11.4%, annualized.

Did CAPS call the fall?
Just yesterday, for instance, CAPS All-Star rayandfran made the ultimate bear call on Ford Motor:

My pick for bankruptcy. As long as the company makes huge, fuel inefficient vehicles that break down all too easily and refuses to innovate or create a product that people are willing to (repeatedly) buy, it should fall victim to economic Darwinism and go extinct. Even if it does get government bailout $$, prospects for the common stockholders are grim.

Consistent with that call, shares of both Ford and GM continued to plunge yesterday on worries that the proposed $25 billion bailout is facing too much political opposition.

The bearish takeaway?
Never bet on a stock based purely on a bailout possibility. As CAPS' rayandfran understands, a bailout by the U.S. government doesn't necessarily mean that current shareholders stand to benefit. Unless you're truly able to discount the massive dilution effects that are certain to arise from the rescue plan (whatever it ends up being), buying into the automakers is really just a gamble.

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!