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 four or five stars.

Without further ado:


Yesterday's % Gain

Coventry Health Care (NYSE:CVH)


Apollo Investment




UnitedHealth Group (NYSE:UNH)


Teva Pharmaceutical


There's a reason I selected those notable gainers, as opposed to other winners making noise on Tuesday, such as low-rated Citigroup (NYSE:C): 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, 98% of the 388 All-Star members who've rated Motley Fool Stock Advisor pick Coventry have a bullish opinion of the stock. In late October, one of those top Fools, tj99, helped Fools handle the insurer's health risks:

Solid company, terrible time in the markets. Who knows what is ahead for health care? But good companies adapt, and this is a buying opportunity if you have a long term perspective, and can tolerate the uncertainty.

Shares of Coventry have risen by 80% since that call. In fact, yesterday's pop came after the company reported quarterly results that easily topped analyst estimates, and on general optimism that a health-reform bill would exclude a government-run alternative.

The bullish lesson?
Learn to embrace uncertain situations. Investors often have a misconception that they can sit back, relax on the sidelines, and simply jump into a stock when all of its risks are resolved. But as Warren Buffett reminds us: "The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is actually the friend of the buyer of long-term values."

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

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


Yesterday's % Loss

DineEquity (NYSE:DIN)


Deutsche Bank


Hartford Financial (NYSE:HIG)


Goldcorp (NYSE:GG)


MGM Mirage


While yesterday's nasty plunge in five-star stock USEC (NYSE:USU) may have caught our community off-guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
In late April, for instance, CAPS All-Star BigFatBEAR couldn't quite stomach DineEquity's hot stock:

With $2.3 billion in debt for a $500 million company, you have to be VERY careful in this climate. [DineEquity] stopped being reasonably priced from 10 to 20, and is now sporting a forward P/E of 30. The margins also spell struggle in the mid-term for this stock.

Consistent with that warning, shares of the Applebee's and IHOP restaurant operator plunged yesterday, after posting same-store sales below Wall Street's expectations.

The bearish takeaway?
Built into a stock's price are very specific growth and risk assumptions. Therefore, it's your job as an investor to assess whether those expectations are reasonable, given the company's financial and competitive position. As Buffett reminds us, "Investors making purchases in an overheated [stock] need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid."

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. Coventry and UnitedHealth are Motley Fool Stock Advisor picks. UnitedHealth is also an Inside Value selection, and the Fool owns shares of it. The Fool's disclosure policy is always the big winner.