Tuesday's Biggest Stock Stars

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

Without further ado:

There's a simple reason why I selected the largest five-star gainers, as opposed to other big-name winners making noise on Tuesday, like low-rated solar stocks Canadian Solar (Nasdaq: CSIQ) and First Solar. Stocks go up all the time, but unless you were able to predict the pop, what does it matter? 

Our community of more than 100,000 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?
Of the 239 CAPS All-Stars who've rated Fluor, 96% have a bullish opinion. On the strength of that support, the Texas-based contractor and engineering company recently regained its five-star rating.

Back in February 2007, CAPS All-Star pladad4life engineered this succinct bull pitch:

I anticipate that with the democrats holding power that there will be addition government contracts in the next 5 yrs, add to that the oil industries clamor to build additional refineries and you have two of the most promising areas for growth for this organization.

Fluor is up a stunning 123% since that call. In fact, yesterday's pop came after the company posted impressive first-quarter profit growth of 63%, driven mainly by continued strength in the oil and gas markets -- exactly as pladad4life had predicted.

The bullish lesson?
Learn to give your portfolio "pop" potential. By searching for solid companies looking to make substantial investments in attractive markets, you give yourself plenty of chance to profit if, or when, the boom does hit. As pladad4life understands, owning best-of-breed businesses, standing in prime position to capitalize on several flourishing markets, is a pretty smart way to get multibagger returns.

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

Here are Tuesday's biggest one-star decliners:  

One-star stocks inspire the least confidence from our CAPS players. So although yesterday's drop in highly rated Nuance Communications (Nasdaq: NUAN) 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? 
CAPS All-Star WesCstEagleFan shared these bearish thoughts on IndyMac Bancorp three months ago:

The next upcoming disaster is going to be from [their] bread and butter loans of Alt-A. ... [T]he part that really scares me about Indymac Bank is that they were the largest lender in reverse mortgages in the U.S. How is that mortgage model going to work in a declining housing market where prices are dropping?

Not surprisingly, shares of the mortgage lender are down about 60% since that call. In fact, yesterday's plunge came after an analyst said IndyMac would be forced to raise "significant capital" in the face of further expected losses -- right in line with WesCstEagleFan's pitch.

The bearish takeaway?
Get to know your environment. Different economic conditions affect business models in different ways, so make sure you're aware of how your own stocks will be affected when those variables inevitably shift. When things are rolling, it's easy to become complacent as an investor, but that's exactly when you need to make sure those gains are sustainable going forward.

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 the Motley Fool CAPS community, tens of 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!