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

Without further ado:


Yesterday's % Gain

Metalico (AMEX: MEA)


McMoRan Exploration (NYSE: MMR)


Darling International (NYSE: DAR)


Orbital Sciences (NYSE: ORB)




There's a simple reason why I selected the largest five-star gainers, as opposed to other big-name winners making noise on Thursday, like one-star bond insurers MBIA and Ambac Financial (NYSE: ABK). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?

Our community of more than 97,000 CAPS Fools considers its five-star stocks the most likely to outperform the market. And so far, CAPS has indeed proven its market-beating prowess: Over its first year, top-rated stocks returned roughly 28%.

Written in the (five) stars?
For example, out of the 197 CAPS All-Stars who've rated Metalico, just two have a bearish opinion. Fueled by that massive support, the New Jersey-based scrap metal processor has consistently been named as one of CAPS' best overall stocks.

Last February, CAPS player octayn500 touched on some of the reasons why:  

I wish I caught this one earlier, but being a brand new CAPS member and a fairly new investor, all I can say is there's no time like the present ... plenty room for growth, still under the radar ... small-cap, solid management. CAPS top 10, the list goes on and on, I'm in.

When octayn500 penned that pitch, Metalico had already more than doubled over the previous year. Yet since then, the stock has managed to run up another 25%.

The bullish lesson?
What goes up doesn't have to come down. As long as a company continues to grow intrinsic value faster than its own stock price, there's no reason to think that the shares can't keep on rising -- especially if it's a small cap to start with. After all, automatically selling (or even ignoring) winners and holding on to losers is akin to, as Peter Lynch quips, "pulling out the flowers and watering the weeds."

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

Here are Thursday's biggest one-star decliners:   


Yesterday's % Loss

AMCORE Financial (Nasdaq: AMFI)




U.S. Auto Parts Network


QC Holdings




One-star stocks inspire the least confidence from our CAPS players. So although yesterday's drop in highly rated Nokia (NYSE: NOK) 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?
Two weeks ago, for instance, CAPS All-Star tamikasellsavon highlighted the many difficulties surrounding AMCORE Financial:

I worked at AMCORE for 5 years and they did well for quite some time. I think the problem comes from them purchasing too many banks. It has hit them hard with way the economy is going and the problem with people not being able to pay their mortgages.

Consistent with that call, shares of AMCORE plunged nearly 30% yesterday after the Illinois-based bank posted a nasty quarterly loss on soaring bad loan provisions.

The bearish takeaway?
Always try to spot a company's hazardous exposures before you get battered by them. When things are going well, it's easy to become complacent as an investor, but that's precisely when you need to make sure management's ambitions aren't getting in the way of sustainable growth. Like Warren Buffett says, "You only find out who is swimming naked when the tide goes out."

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, more than 97,000 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!

Orbital Sciences is a Rule Breakers selection. Try this market-beating newsletter free for 30 days.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned.  The Fool's disclosure policy is always the big winner.