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

Without further ado:


Yesterday's % Gain

Lockheed Martin (NYSE:LMT)




General Dynamics


UnitedHealth Group (NYSE:UNH)




There's a reason why I selected those notable gainers, as opposed to other winners making noise on Monday, like low-rated automakers Ford (NYSE:F) and GM. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 130,000 CAPS Fools considers its "high-star" stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 95% of the 366 All-Star members who've rated Lockheed Martin have a bullish opinion of the stock. In November, one of those Fools, blary54, explained why the defense contractor seemed particularly well-positioned:

Defense powerhouse. Beat out Boeing for the 200 billion dollar Joint Strike Fighter contract. Their new plane, the F-35 Thunder will be adopted by all the branches of the military. Other countries such as Canada, UK and Italy will purchase the planes also.

Consistent with that call, shares of Lockheed surged yesterday after Defense Secretary Robert Gates said that the Pentagon, as part of his proposed budget, would cease the F-22 Raptor program run by the company, but would increase spending for its F-35 Joint Strike Fighter.

The bullish lesson?
There's really no substitute for knowing a business cold. As CAPS' blary54 demonstrates, researching the potential of a company's new-generation products, while Mr. Market worries over its old ones, can be a great way to gain an edge. Like Wayne Gretzky once advised: "Skate to where the puck is going to be, not where it has been."

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

Here are five of Monday's biggest decliners with a one- or two-star rating:  


Yesterday's % Loss

Sun Microsystems (NASDAQ:JAVA)


True Religion Apparel


SunTrust Banks (NYSE:STI)


Blue Nile


Sears Holdings


While yesterday's drop in five-star miner Rio Tinto (NYSE:RTP) may have caught our community off-guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Two weeks ago, for instance, CAPS All-Star TotoMMB warned that the proposed purchase of Sun Microsystems had left little reward in the shares:

Nice bump on the IBM (NYSE:IBM) bid, but I'll go negative after the fact. If the deal goes through, there's not much upside left in this. If the market falls, this deal will look less attractive and that bonus value will evaporate. ... It worked for me on [Yahoo!] with the [Microsoft-Yahoo!] "non-deal", don't know why it won't work now.

In line with that bear call, shares of Sun plunged yesterday on news that the proposed deal was falling apart because of pricing issues.

The bearish takeaway?
The most important job you have as an investor is to quantify a stock's upside and downside. At the very least, you should always make sure you're being compensated appropriately for the risks you're taking on. If a stock's potential payoff seems minimal even under the most optimistic of scenarios -- as TotoMMB surmised with Sun -- it's probably best to move on.

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. UnitedHealth, Sears, and Microsoft are Motley Fool Inside Value picks. UnitedHealth is also a selection of Stock Advisor. Blue Nile is a Rule Breakers recommendation. The Fool owns shares of UnitedHealth and CapitalSource. The Fool's disclosure policy is always the big winner.