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

Without further ado:


Yesterday's % Gain

Focus Media Holding (NASDAQ:FMCN)




U.S. Global Investors




Sigma Designs (NASDAQ:SIGM)


There's a reason I selected notable five-star gainers, as opposed to other big-name winners making noise on Monday. Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 115,000 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: Since its inception in 2006, five-star stocks are beating the market by 12 points, annualized.

Written in the (five) stars?
For example, out of the 269 CAPS All-Stars who've rated Chinese digital advertising operator Focus Media Holding, an overwhelming 97% have a bullish opinion.

Just last week, CAPS member Halken helped our community stay focused on Focus' fundamentals:

[Focus Media] is a great value with a low [price-to-earnings ratio] and excellent earnings growth around the corner. For a company with this kind of growth rate it should be trading much higher. The [O]lympics will make for a great Q3 as they are best positioned to take advantage of increased advertising, especially in outdoor displays.

Consistent with that call, shares of Focus Media surged yesterday, after the company reported better-than-expected second-quarter earnings and issued upside guidance for the third quarter, to boot.

The bullish lesson?
Like most things in life, growth is greatest at a good price. By purchasing stocks at a steep discount to their projected growth rates, you give yourself the opportunity to benefit when your companies perform well. As Warren Buffett says, "The investor of today does not profit from yesterday's growth."

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

Here are five of Monday's biggest one-star decliners:   


Yesterday's % Loss

Freddie Mac (NYSE:FRE)


Fannie Mae (NYSE:FNM)


Hovnanian Enterprises


General Motors (NYSE:GM)


Lehman Brothers (NYSE:LEH)


One-star stocks inspire the least confidence from our CAPS members, and for pretty good reason: Since CAPS started, one-star stocks have dropped an average of 11.4%, annualized.

Did CAPS call the fall?
Less than two weeks ago, for instance, CAPS member jester112358 made a quick comment about the likely rescue of Fannie Mae and Freddie Mac: "New bailout plan will not work forcing government to buy preferred shares. Common shareholders will get nothing."

In line with that bear call, shares of both mortgage giants plunged yet again yesterday, on renewed fears that a government bailout is imminent. If so, equity holders would probably be left with nothing.

The bearish takeaway?
There's no such thing as a free lunch. As CAPS' jester112358 understands, a bailout by the U.S. government doesn't necessarily mean that current shareholders stand to benefit. Unless you're truly able to discount the massive dilution effects that are certain to arise from the rescue plan (whatever it ends up being), Fannie and Freddie are no investment.

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! 

Focus Media Holding is both a Global Gains and Rule Breakers recommendation. Sigma Designs is a Motley Fool Hidden Gems Pay Dirt and Rule Breakers pick.  Try any of our Foolish newsletter services 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.