Thursday's Biggest Stock Stars

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

Without further ado:

There's a reason why I selected those notable gainers, as opposed to other winners making noise on Thursday, like low-rated tech stocks Dell and Research In Motion (NASDAQ:RIMM). 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, 95.7% of the 700 All-Star members who've rated Nokia have a bullish opinion of the stock. Two weeks ago, one of those Fools, wbinv2100, explained why the mobile handset giant looked like a global bargain:

I'm a meat and potatoes type of guy. Now don't get me wrong Apple and [Research in Motion] are cool but the last time I checked they did not have 40% of the world headset market. Nokia does! It also has a P/E in the single digits, pays a nice dividend, and is buying back shares.

Consistent with that call, shares of Nokia surged yesterday despite posting a drop in first-quarter earnings, as management stood by its outlook for the global mobile phone market and its goal of taking even more market share this year.

The bullish lesson?
Learn to pounce on stocks priced for imperfection. It's virtually impossible to call a stock's "bottom," but if you're confident that the risks are already baked into the price, there's a good chance your investment will turn out well. As Warren Buffett recently wrote, "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."

And now for the losers ...
Of course, winning isn't everything in the stock market. Here are five of Thursday's biggest decliners with a one- or two-star rating:  

While yesterday's drop in highly rated Silver Wheaton may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Last week, for instance, CAPS All-Star Schmacko expressed skepticism over MGM Mirage's expectations:

They still need to come up with a lot of money to keep their city center project going. Also I'm dubious that just because they announced they want to sell two casinos, that they'll actually be able to sell either or both, and if they do I doubt the price will be what they're expecting.

In line with that call, shares of MGM Mirage plunged yesterday, after The Wall Street Journal reported that billionaire Carl Icahn and fund manager Oaktree Capital Management, who recently teamed up to buy a ton of MGM Mirage debt, are pressing the embattled casino operator to restructure in bankruptcy court.

The bearish takeaway?
Always identify a stock's risk exposures before they come back to haunt you. As CAPS' Schmacko understands, one of the most common mistakes investors make is not paying close enough attention to a company's true financial position. Unless you can reasonably conclude that a company will remain intact even under the worst of scenarios, investing in overleveraged balance sheets just isn't worth the headaches.

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!