Wednesday's Biggest Stock Stars

Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Wednesday'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 Wednesday, like one-star stock La-Z-Boy. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 135,000 CAPS Fools considers its "high-star" stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 97.4% of the 195 All-Star members who've rated Atlas Pipeline have a bullish opinion of the stock. In March, one of those Fools, GREYGOLD, explained why the natural gas company was getting a whole lot leaner:

This company has excellent management in place and is currently in the process of deleveraging by selling some less valuable assets and concentrating on newer and more profitable parts of the business. ... This is a strong value play at the moment, with great future potential!

With the help of yesterday's double-digit pop, Atlas is up more than 60% since that call.

The bullish lesson?
Always hunt for 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 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 Wednesday's biggest decliners with one- or two-star ratings:  

While yesterday's plunge in highly rated Valero Energy (NYSE:VLO) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
In November, for instance, CAPS All-Star leaderoftheback dished out these bearish thoughts on DISH Network:

As a holder of [TiVo (Nasdaq: TIVO], DISH news is crossing my eyeballs. Poor customer service, high turnover, a CEO who talks like it's no big deal because they are cheaper than [DirecTV], not to mention trying to hose [TiVo] ... I bet they believe business is about making money, not about happy customers. Well, you reap what you sow and you get what you pay for.

Consistent with that rant, shares of DISH Network sank yesterday after a federal court judge ordered EchoStar Communications, a part of DISH Network, to pay rival TiVo $103 million more for violating TiVo's patents.

The bearish takeaway?
Always identify a stock's risk exposures before they come back to haunt you. One of the most common mistakes we can make as investors is failing to see the dangerous things that lurk just around the corner. Unless you're willing to consider all of the possible ways your stock might get killed -- both in the short and the long run -- there's a good chance you'll wake up one day and get blindsided.

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!