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:


Yesterday's Gain

Suntech Power (NYSE:STP)






Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B)


Nucor (NYSE:NUE)


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 financials Citigroup (NYSE:C) and Morgan Stanley. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Written in the (five) stars?
Our community of more than 130,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. For example, 97% of the 4,343 members who've rated Suntech Power have a bullish opinion of the stock. Four days ago, one of those Fools, MrSonics, predicted that the solar panel maker would soon have its day in the sun:

Solar's been beaten down due to many reports of oversupply and crowded competition … The competition will thin, with only the strongest surviving to capitalize on the economic recovery in 12-24 months … especially with its "green" emphasis

With the help of yesterday's 21% pop, MrSonics is handily beating the market since that call.

The bullish lesson?
When the shares of a company you admire take a beating, always try to figure out why. If Mr. Market, in your opinion, is being overly gloomy with his assessment, it might be a perfect time to buy quality on the cheap. As Warren Buffett recently wrote, "When investing, pessimism is your friend, euphoria the enemy."

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:   


Yesterday's Loss

MGIC Investment (NYSE:MTG)


Chartered Semiconductor




Ocwen Financial


Doral Financial


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

Did CAPS call the fall?
In August 2007, for instance, CAPS All-Star Allstar13913 was already warning our community about MGIC Investment:

Mortgage Insurer that picks up the bill when someone defaults on a loan. In the next year, many ARM mortgages will reset to a higher rate leading to missed payments and additional foreclosures. Because of these foreclosures, I believe companies like this will take a severe hit to the bottom line.

With the help of yesterday's plunge, shares of the mortgage insurer are down a whopping 97% since that call.

The bearish takeaway?
There's really no substitute for knowing a business model cold. As CAPS' Allstar13913 demonstrates, by understanding exactly how a company works and the many dangers it faces, you prevent yourself from using fuzzy, surface-level arguments like "too big to fail" or "due for a bounce" when analyzing a stock. Like Warren Buffett simply says, "Risk comes from not knowing what you're doing."

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! 

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Suntech Power is a Motley Fool Rule Breakers pick. Berkshire Hathaway is an Inside Value and Stock Advisor selection. The Fool owns shares of Terex and Berkshire. The Fool's disclosure policy is always the big winner.