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, like one-star stock XL Capital (NYSE:XL). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 125,000 CAPS Fools considers its five-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 97% of the 314 All-Star members who've rated Ingersoll-Rand have a bullish opinion of the stock. Just last week, one of those Fools, Alex1963, explained why the diversified industrial supplier seemed like a solid bet:

Fantastic mgt #s, strong history of groth on returns, low debt, high per employee profitably compared to their industries and so on. They don't have much of a moat but they have a long history of increased growth & they have under .50 [debt] to equity which is a critical criteria for me especially in this economic climate.

Consistent with that call, shares of Ingersoll-Rand surged yesterday after the company's quarterly results topped Wall Street's estimates, and management issued a positive outlook for 2009 on expected lower commodity costs.

The bullish lesson?
If you plan to play the turnaround game, be sure to pick up broken stocks -- not broken companies. Buying into battered stocks isn't easy on the stomach, but if you focus on businesses with strong fundamentals and proven track records of shareholder value creation, the odds of a turnaround are that much better. As yet another Ingersoll-Rand owner, Warren Buffett, recently wrote, "Fears regarding the long-term prosperity of the nation's many sound companies make no sense."

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 drop in five-star stock NVIDIA (NASDAQ:NVDA) may have caught our community off-guard, one-star stocks are fully expected to fall hard.

Did CAPS call the fall?
In May, for instance, CAPS member wazzoo556 shared these bearish thoughts on Unisys:

[G]rowing revenue must also be part of the equation at some point. Sadly, management has always turned a blind eye to actually selling their product. ... With a well-tuned marketing strategy, they could have milked the mainframe niche market cash-cow and grown a good herd of clients. Now all they have is a few captive clients that are nervously eyeing some sort of exit strategy that wouldn't cost more than having to purchase the next Unisys hardware or software upgrade.

Not surprisingly, shares of the technology-services provider are down 85% since that call. In fact, yesterday's drop came after Standard & Poor's downgraded the company’s credit rating further into junk status late on Tuesday.

The bearish 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 model management teams that actually have the skill to take advantage of the opportunities open to them. As CAPS' wazzoo556 understands, you can have the fastest horse in the world, but if the jockey stinks, your odds of turning a profit fall sharply. 

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!