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 CIT Group (NYSE:CIT): 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 4,405 members who've rated Activision have a bullish opinion of the stock. Just two days ago, one of those Fools, mc8788, explained why the video game giant looked too tough to beat:

Merging with Blizzard was the smartest move any publicly traded company in the gaming industry has done in the past decade. Although some business decisions may interfere with Blizzard's patient pursuit of creative perfection, fans cannot complain about the line-up this company will be shooting out year after year. Creative perfection meets business efficiency.

Consistent with that call, shares of Activision surged yesterday after its quarterly profit easily topped Wall Street estimates, fueled by strong sales for its newest games, Transformers and X-Men.

The bullish lesson?
The simplest reasons to buy a stock are often all you need to make money. As CAPS' mc8788 understands, when a company owns such wildly popular brands as Activision does, plus has the business savvy to capitalize, it's really not necessary to overthink the investment. Like Peter Lynch reminds us, "Never invest in any idea you cannot illustrate with a crayon."

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 five-star stock Markel (NYSE:MKL) may have caught our community off-guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Earlier this year, for instance, CAPS All-Star JakilaTheHun had trouble stomaching Brinker's prospects:

Dine-in restaurants will continue to suffer throughout '09 and maybe through '10 or longer. This will probably be one of the last industries to recover from a recession ... Plus, I'm not too hot on Brinker's restaurants -- there are a lot better places to eat out there than Chili's.

Consistent with that warning, shares of Brinker plunged yesterday after the company's fourth-quarter sales fell 22%, while management issued guidance that was also worse-than-expected.

The bearish takeaway?
Always know where you're exposed. One of the most common mistakes we make as investors is underestimating how sensitive a business can be to specific economic and industry-related variables. Unless you're willing to consider all of the possible ways your stock might get killed -- both from a micro and macro angle -- 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!