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:


Yesterday's % Gain

Denison Mines (AMEX:DNN)


Simcere Pharmaceutical Group (NYSE:SCR)


Mindray Medical International (NYSE:MR)


PT Indosat Tbk (ADR)


Endeavour International (AMEX:END)


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 one-star financials Lehman Brothers and Wachovia (NYSE:WB). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?

Our community of more than 110,000 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 448 CAPS All-Stars who've rated Motley Fool Rule Breakers pick Mindray Medical, only seven have a bearish opinion. Fueled by that support, the Chinese medical-device company has kept a five-star rating for more than six months straight.

Three months ago, CAPS All-Star pennysplants listed several reasons to keep Mindray in mind:  

Competitive advantages, dedication to R&D, BOTH Chinese and international markets / sales force, stellar management (all things considered), good balance sheet/financial health, and in a sector which is growing by leaps and bounds (tho margins may decline).

Mindray Medical is already up 42% since that call.

The bullish lesson?
Know when to break the rules. Hypergrowth companies in emerging markets are notoriously fraught with risk. But by seeking those with a strong competitive advantage, solid balance sheet, and top-notch management team, you can reduce your downside substantially. As CAPS' pennysplants and our Rule Breakers team both understand, identifying well-managed, financially sturdy companies on the cusp of huge innovative breakthroughs can actually be a reliable way to outsized gains.

And now for the losers...
Of course, winning isn't everything in the stock market. Here are Tuesday's biggest one-star decliners:   


Yesterday's % Loss

First Defiance Financial




First South Bancorp


RH Donnelley




One-star stocks inspire the least confidence from our CAPS players. So although yesterday's drop in five-star stock Dolby Laboratories (NYSE:DLB) 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 last month, for instance, CAPS All-Star Tastylunch moved in on Move:

One would think one would have to be able to MOVE in order to want to use a service like MOVE. One would think MOVE wouldn't trade a high P/E when their sales environment is so bad. One would think MOVE's price would MOVE downward by at least 30% from current levels.

Unsurprisingly, shares of the online real estate listings provider are down about 19% since that call, and have fallen more than 40% over the last year.

The bearish takeaway?
Always be conscious of your surroundings. Different economic conditions affect different businesses in different ways, so make sure you're aware of how current market trends might influence your own investments. If a good chunk of your portfolio is exposed to business models that are extremely vulnerable in the prevailing environment, you might be in for an unpleasant surprise.    

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, 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!