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 top ratings of four or five stars:


Yesterday's Gain

National Bank of Greece (NYSE:NBG)


Dow Chemical


Caterpillar (NYSE:CAT)


NYSE Euronext (NYSE:NYX)


PotashCorp (NYSE:POT)


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

Our community of more than 150,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 96% of the 609 members who've rated National Bank of Greece have a bullish opinion of the stock. Last spring, one of those Fools, All-Star austinhippie, singled out the stock as a bankable bargain:

Rumors and speculation can hinder the prospects of genuine and decent investments. People are afraid of financials, of foreign markets and of the stock market in general. I am convinced that many of the next great fortunes will be amassed by holders of stock in solid financial companies. ... This one looks like a winner for the long haul to me right now.

Shares of the foreign bank are up more than 85% since that call. In fact, yesterday's nearly 25% pop came on hopes that the European Union, specifically Germany, will indeed help Greece with its growing debt concerns.

The bullish lesson?
Learn to be long-term greedy when others are short-term fearful. Going against the herd is never easy, but if you truly believe in a company's long-run potential, major downturns can offer the very best buying opportunities. As Warren Buffett reminds us, "Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."

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

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


Yesterday's Loss

Lannett (NYSE:LCI)


Fuel Systems Solutions


Hartford Financial (NYSE:HIG)




The Talbots


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

Did CAPS call the fall?
Last March, for instance, CAPS All-Star FinancialModeler highlighted Lannett as an unhealthy decision:

Whoever said this stock is undervalued needs to learn what value really is. [Lannett] has a P/E ratio over 100. The stock trades within 10% of its 52 week high. Returns on assets, equity, and capital is almost nothing. No dividend. Less than 2% profit margin is weak. This is not value.

Shares of the generic-drug maker are trailing the market by nearly 65 points since that call. In fact, yesterday's market-bucking drop came after the company posted revenue and net income decreases in the company's second quarter.

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 fundamentals going forward. As Buffett says, "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 identify tomorrow's big movers. Over time, consistently reverse-engineering winning -- and losing -- stocks will help you retire wealthy.

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. NYSE Euronext is a Motley Fool Rule Breakers pick. The Fool's disclosure policy is always the big winner.