Tuesday's Biggest Stock Stars

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:

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 automakers General Motors (NYSE:GM) and Ford. 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, 96% of the 3688 All-Star members who've rated Marvel Entertainment have a bullish opinion of the stock. Last week, one of those Fools, DaretothREdux, tapped the stock as a bargain-basement way to get in on some blockbusters:

I feel that their movies and the franchises they already own will do even better during bad economic times. Think Gone With The Wind during the great depression. Our GWtW is Spiderman and Ironman and the coming Captain America movies.

Consistent with that call, shares of Marvel surged yesterday, after the company topped Wall Street's fourth-quarter expectations on strong Iron Man DVD sales.

The bullish lesson?
Whenever the shares of a company you like take a tumble, always try to figure out why. If Mr. Market, in your own opinion, is being too short-sighted with his appraisal, then you might have found an opportunity to buy quality on the cheap. As Warren Buffett says, "All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies."

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:

While yesterday's drop in highly rated gold stocks Yamana (NYSE:AUY) and Barrick may have caught our community off-guard, one-star stocks are fully expected to fall hard.

Did CAPS call the fall?
In late December, for instance, CAPS member xPhr0z3n raised some red flags on RadioShack: "I doubt they can stand our current economic times. Tons of competition, and could likely go bankrupt after a weak holiday. I mean, I've never seen more than 5 people in a [RadioShack]."

In line with that pitch, shares of the electronics retailer plunged yesterday after its quarterly profit dropped 39%, due mainly to the "recessionary retail trading environment" -- just as xPhr0z3n had warned.

The bearish takeaway?
Always know where you're exposed. One of the most common mistakes we make as investors is underestimating how sensitive a business can be to specific economic and industry-related variables. As xPhr0z3n understands, unless RadioShack has the competitive strength to survive the downturn, buying into an increasingly irrelevant retailer on the verge of being "shaken out" just isn't worth the risk.

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!