Please ensure Javascript is enabled for purposes of website accessibility

Tuesday's Biggest Stock Stars

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 7:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Yesterday's market is today's road map.

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

Without further ado:

Company

Yesterday's Gain

CapitalSource (NYSE:CSE)

20.77%

Cemex (NYSE:CX)

17.33%

Vale

13.18%

NYSE Euronext (NYSE:NYX)

12.81%

Agrium (NYSE:AGU)

12.19%

There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Tuesday, like low-rated Morgan Stanley (NYSE:MS). 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 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, 96% of the 827 All-Star members who've rated Cemex have a bullish opinion of the stock. Late last week, dferry01 explained why the Mexican cement maker would start to firm up:

Fears that Cemex could default on its massive debt load before it starts receiving government stimulus cash are what keeps the price down. ... I think Cemex will be fine. ... [C]reditors have been remarkably willing to renegotiate debt payments in the current climate, as being too strict often means their debtor defaults or even, in some cases, goes bankrupt.

Consistent with that call, shares of Cemex surged yesterday after investors shrugged off a slump in fourth-quarter sales, and instead cheered management's progress in restructuring its debt load.

The bullish lesson?
Whenever the shares of a company you like take a tumble, always try to figure out why. If the reasons for the drop, in your own opinion, are temporary, then you might have found a good opportunity to buy quality on the cheap. As Warren Buffett says, "Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."

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

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

Company

Yesterday's Loss

General Growth Properties (NYSE:GGP)

10.27%

Fortress Investment Group

8.27%

CapLease

7.60%

SuccessFactors

5.77%

Palm

5.53%

While yesterday's plunge in five-star stock Satyam Computer (NYSE:SAY) 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?
Last week, for instance, CAPS All-Star TheGarcipian shared these thoughts on General Growth Properties:

Over the past 1.5 years (when I first started tracking this mismanaged company), the financial picture has not improved and has actually gotten much worse: besides bad insider non-reported loans, the executives have been selling their options like crazy.

In line with that bearish call, shares of General Growth sank yesterday after the shopping mall real estate investment trust missed a deadline to repay debt, while Moody's responded by downgrading its ratings further into junk status.

The bearish takeaway?
Always keep an eye on the insiders. Now, it's true that insiders may sell for reasons that have nothing to do with their outlook on the business, but when the fundamentals are deteriorating, heavy insider selling can often cement the bear case. With General Growth, for example, insider selling turned out to be a great sign of bad things to come.

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, tens of 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!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Cemex is a selection of Motley Fool Global Gains and Stock Advisor. CapitalSource is a choice of Income Investor. NYSE Euronext is a Rule Breakers selection. Satyam is a Stock Advisor recommendation. Grab your free trial subscription to any of our investing newsletters today. The Fool owns shares of Cemex and CapitalSource. The Fool's disclosure policy is always the big winner.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Morgan Stanley Stock Quote
Morgan Stanley
MS
$91.66 (1.62%) $1.46
NYSE Holdings LLC Stock Quote
NYSE Holdings LLC
NYX.DL
Brookfield Property REIT Inc. Stock Quote
Brookfield Property REIT Inc.
GGP
CEMEX, S.A.B. de C.V. Stock Quote
CEMEX, S.A.B. de C.V.
CX
$4.66 (2.87%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.