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

Without further ado:


Yesterday's % Gain

Focus Media Holding


Suntech Power Holdings


Mechel (NYSE:MTL)


Foster Wheeler (NASDAQ:FWLT)


Joy Global (NASDAQ:JOYG)


There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Wednesday. 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, an overwhelming 97% of the 326 CAPS All-Stars who've rated Mechel have a bullish opinion of the stock.

Late last month, CAPS member willbeau kept our community nicely updated on the Russian mining and steel company:

MTL is down 40% today on criticism from Putin. Goes to show Russia is not the United States. When congress was complaining about the excess proffits of the big oil companies, [ExxonMobil (NYSE:XOM)] didn't go down 40%. I still want this stock in my portfolio for coal steel Russia.

Shares of Mechel are already up an impressive 46% since that call.

The bullish lesson?
When the shares of a company you like take a tumble, always try to figure out why. If Mr. Market, in your opinion, is throwing one of his classic overreactions, it might be a perfect time to buy quality on the cheap. As Warren Buffett once said, "Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."

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

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


Yesterday's % Loss

Thornburg Mortgage (NYSE:TMA)


Evergreen Energy




Northwest Airlines (NYSE:NWA)


Delta Air Lines (NYSE:DAL)


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?
In March, for instance, CAPS member mhtappi voiced some bearish concerns over Thornburg Mortgage:

I simply do not see [Thornburg] surviving in this financial market. They do not have any significant offers or bids for the company, owe margin call, and are on the brink of bankrupcy. Unless they can quickly raise capital, much tougher to do in their condition, I say its headed down in a hurry.

Shares of the embattled mortgage lender are down 80% since that call. In fact, yesterday's plunge came after a Wall Street analyst downgraded the stock on continued doubts over the company's future -- just as CAPS' mhtappi had warned.

The bearish takeaway?
Just because a stock has plummeted in price, that doesn't necessarily make it cheap. Trying to catch a falling knife can be profitable, but only if you can handicap the chances of a turnaround and know they're in your favor. As CAPS' mhtappi understands, if the odds of survival are clearly stacked against it, there's no reason why the stock can't keep going down.

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 is a Motley Fool Global Gains and Rule Breakers recommendation. Suntech Power is also a choice of Rule Breakers. 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.