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

AgFeed Industries (NASDAQ:FEED)


Meridian Bioscience


Yamana Gold (NYSE:AUY)


Flamel Tech




There's a reason why I selected those notable gainers, as opposed to other winners making noise on Monday, like newly bought-out Sun Microsystems (NASDAQ:JAVA). 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, 98% of the 437 members who've rated AgFeed have a bullish opinion of the stock. Last week, one of those Fools, SRF4REAL, explained why the Chinese animal feed maker looked like a "live stock":

The company has guts and big plans for chinese hog production, knows how to profit in down times and invests capital wisely. Strong balance sheet with little debt. They had me upset over the new offering at Christmas, but that just gave an opportunity to buy even more at .98 ... Ag play, strong China stock pick to lead the market recovery.

After yesterday's downtrend-bucking, double-digit gain, AgFeed is beating the market nicely since that call.

The bullish lesson?
When the shares of a solid company take a plunge, always try to figure out why. If the reasons for the drop, in your own opinion, are just short-term in nature and should be worked out over time, then the stock's plunge might be a good opportunity to buy quality on the cheap. As Warren Buffett says, "Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."

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

Capital One Financial (NYSE:COF)




Citigroup (NYSE:C)


Hartford Financial


Prudential Financial


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

Did CAPS call the fall?
On Friday, for instance, CAPS All-Star rd80 wasn't so quick to applaud Citigroup's $1.6 billion first-quarter "profit." Here's an excerpt from a much longer and detailed pitch:

Subtract preferred share dividend payments of $1.3 billion and a preferred share conversion adjustment of nearly $1.3 billion and those operating earnings turn into a loss of 18 cents per share. ... If they can't report a profit for a quarter with near zero Fed money, what will it take?

Consistent with that call, shares of Citigroup plunged yesterday after Bank of America's (NYSE:BAC) growing credit losses sparked a fresh round of financial fears. One analyst calculated Citigroup's underlying earnings at a loss of $0.38 per share -- even worse than CAPS' rd80 had figured.

The bearish takeaway?
Never blindly buy the headlines. Just because a company posts a "press release" profit, that doesn't always mean it's actually earned anything for the quarter. Generally Accepted Accounting Principles (GAAP) notoriously allow for loads of adjustments; scrutinizing the numbers that management reports, as rd80 masterfully demonstrates, is one of the most important skills you can learn as an investor.

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. The Fool's disclosure policy is always the big winner.