Monday's Biggest Stock Stars

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 top ratings of four or five stars:

There's a reason I selected those notable gainers, as opposed to other winners making noise on Monday, like one-star airline stocks UAL and US Airways. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 145,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 97.8% of the 1,458 members who've rated Taseko have a bullish opinion of the stock. In late July, one of those Fools, jed71, explained why the Canadian miner seemed like a sure path to prosperity:

[Y]ou get 2 major commodities for the price of 1! Gibraltar, the company's copper mine, has been ramping up production for the past few years. ... The Prosperity mine is a copper / gold mine with proven reserves of around 5BB pounds of copper and 13MM ounces of gold. ... $2 is way too cheap given increased production and the potential of Prosperity.

Shares of Taseko have nearly doubled since that call. In fact, yesterday's double-digit pop came after announcing plans to sell a 25% in Gibraltar to Japanese trading company Sojitz Corp. for $170.5 million -- a move that will help Taseko develop its Prosperity project.

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 over time. As Warren Buffett reminds us, "Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."

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

Here are five of Monday's biggest decliners with one- or two-star ratings:   

While yesterday's drop in highly rated United States Natural Gas (NYSE:UNG) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Just last month, for instance, CAPS All-Star DarthMaul09 warned Fools about getting excited over AIG's price action:

The unstable stock price matches this unstable company. It had a nice percentage gain today, which reminds me of GM after it went bankrupt. Short term sell.

Shares of the embattled insurance giant are already down 26% that warning. Of course, most of that loss came yesterday after a Wall Street analyst cut AIG's price target by 40% on serious concerns over the company's loss reserves.

The bearish takeaway?
Never confuse an improving price with improving prospects. If a company's underlying fundamentals continue to deteriorate, short-term, speculative run-ups can last for only so long. As Buffett observes, "For some reason, people take their cues from price action rather than from values. ... The dumbest reason in the world to buy a stock is because it's going up."

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 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!