Wednesday's Biggest Stock Stars

Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight Wednesday's biggest gainers among the stocks with a top rating of five stars.

Without further ado:

There's a simple reason I selected the largest five-star gainers, as opposed to other big-name winners making noise on Wednesday, such as one-star lender Thornburg Mortgage: Stocks go up all the time, but unless you were able to predict the pop, what does it matter?   

Our community of more than 86,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proved its market-beating prowess: Over its first year, top-rated stocks returned roughly 28%.

Written in the (five) stars?
For example, out of the 141 All-Stars who've rated Boston Beer, a whopping 96% are bullish. Fueled by that elite support, the Boston-based beer maker has maintained a four- or five-star rating for more than six months straight.

Late last June, CAPS All-Star TMFSpeck made this toast to the brewer of Sam Adams beer: "As the largest craft brewer in the US, Sam Adams has been getting it mostly right. Marketing is rightly targeted at 'beer snobs' as they position themselves as an alternative to -- ahem -- bland US beers like Bud [from Anheuser-Busch (NYSE:BUD)] and Miller."

Boston Beer is beating the market since that call. In fact, yesterday's 26% pop came after the company's fourth-quarter profit more than doubled, as drinkers seemed to be shifting away from lower-priced beers and toward premium craft brews -- exactly as TMFSpeck had predicted.

The bullish takeaway?
Let the business trend be your friend. For outsized gains in the consumer-goods space, be sure to own companies that stand to benefit from changing customer tastes, rather than suffer from them. In Wayne Gretzky's words, "Skate to where the puck is going, not to where it's been."

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

Here are Wednesday's biggest one-star decliners:   

One-star stocks inspire the least confidence from our CAPS players. So although yesterday's drop in highly rated Immucor (NASDAQ:BLUD) may have caught our community off-guard, one-star stocks are fully expected to fall hard. In the first year, CAPS' lowest-rated stocks dropped an average of 16.6%.

Did CAPS call the fall?
Just two weeks ago, for instance, CAPS player lookbeyond fired off this bearish flare on Delta Air Lines and Northwest Airlines:

[Delta] and [Northwest] will not merge because it is impossible to resolve the pilot seniority issue. Also, the government will never ever approve it. ... $100 plus oil is here to stay and will only accelerate the airline financial bleeding.

Shares of both airliners have fallen more than 30% since that call. In fact, yesterday's beating came after a Wall Street analyst downgraded the whole airline sector, citing the uncertainty surrounding the proposed Delta-Northwest merger, high oil prices, and ongoing recession fears -- just as CAPS' lookbeyond had warned.   

The bearish lesson?
Always protect your portfolio from airline sickness. Unless you're positive that a looming catalyst will pop an airline stock in the short term, the extremely competitive, highly regulated, capital-intensive nature of the industry make it virtually impossible to make a decent long-term profit. As Richard Branson, head of Virgin Atlantic Airways, quipped when asked how to become a millionaire: "There's really nothing to it. Start as a billionaire; then buy an airline."

The final Foolish move
Investors often focus strictly on stock price movements or the results, 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!