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 top ratings of four or five stars:

There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, like low-rated Cedar Fair. 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, 98.4% of the 372 All-Star members who've rated Allegheny have a bullish opinion of the stock. In March, one of those top Fools, mulledover, singled out the specialty metals maker as a special opportunity:

Just about now is a good time to accumulate, as their business has suffered with the economy and less demand for equipment components (oil/gas drilling, vehicle manufacturing) and this may continue for some time. [H]owever, the other big component is aerospace and the 787 will be making its first test flight in a few months which should perk up interest in this industry.

Shares of Allegheny have already doubled since that call. In fact, yesterday's market-bucking pop came after the company boosted its fourth-quarter earnings outlook due in part to better volume and an improved cost structure.

The bullish lesson?
Learn to embrace the bargains that only bad news can provide. As CAPS' mulledover understands, industry champions often move higher well before the economy or sentiment ever turns, so it's important to jump in while there's still blood in the streets. In Warren Buffett's words, "If you wait for the robins, spring will be over."

And now for the losers ...
Of course, winning isn't everything in the stock market. Here are five of Thursday's biggest decliners with one- or two-star ratings:

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

Did CAPS call the fall?
Last month, for instance, the top ranked member in all of CAPS, UltraLong, strongly advised Fools to say no to Nanometrics:

Underperform [call] from what I would refer to as a rampant overvaluation at these levels. Nanometrics has never shown any real consistency in turning a profit and they even STATED in their quarterly report that their revenue growth would begin slowing.

Consistent with that warning, shares of the semiconductor manufacturing equipment maker plunged yesterday after the company announced plans to offer roughly 2 million new shares at $11, representing a 12% discount to Wednesday's closing price.

The bearish takeaway?
Implicit in a stock's price are very specific growth and risk assumptions. Therefore, it's your job as an investor to assess whether those assumptions are reasonable, given the company's competitive position going forward. As Buffett reminds us, "The investor of today does not profit from yesterday's growth."

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!