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

Without further ado:


Yesterday's % Gain

International Coal Group


Harvest Energy Trust (NYSE:HTE)




Kinross Gold (NYSE:KGC)


Freeport-McMoRan Copper & Gold (NYSE:FCX)


There's a reason why I selected notable five-star gainers as opposed to other big-name winners making noise on Thursday, like low-rated Motorola (NYSE:MOT). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 120,000 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: In the first 20 months since its inception in late 2006, five-star stocks beat the market by 12 points, annualized.

Written in the (five) stars?
For example, 96% of the 763 CAPS members who've rated Harvest Energy Trust have a bullish opinion of the stock. Last month, one of those Fools, mapmakerdude, explained why the Canadian oil and gas trust seemed like a natural selection:

Great dividend, low debt, in natural gas and oil. Canadian dollar has gone to the $1.10 market, but should bounce back... Very cheap now, but could possibly go lower as oil goes down for now (year maybe).

With the help of yesterday's pop, shares of Harvest Energy are up 23% since that pitch.

The bullish lesson?
It's time to double down on dividends. As long as a company has the financial strength to maintain -- and even grow -- its dividend payment, a high yield can often be an easy indicator of market-beating returns. As my Foolish colleague Todd Wenning recently wrote, Mr. Market "is providing some great opportunities to buy strong, well-capitalized companies with high dividend yields -- at lower prices."

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

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


Yesterday's % Loss





The Talbots


Vonage Holdings


General Motors


While yesterday's plunge in highly rated WellCare Health Plans (NYSE:WCG) may have caught our community off-guard, one-star stocks are fully expected to fall hard: Over the first 20 months since CAPS started, one-star stocks dropped an average of 11.4%, annualized.

Did CAPS call the fall?
In August 2007, for instance, CAPS All-Star GunnarVagotis was already warning of a downward move for Move:

This company is struggling at the line between earnings and loss. Revenue growth is stagnant and they can't seem to figure out how to improve margins. Maybe because it's not possible. Price to earnings is high and bordering on N/A.

Not surprisingly, shares of the online real estate listings provider are down 70% since that call.

The bearish takeaway?
If you plan to play the turnaround game, it's often better to wait until the business shows evidence of improving before you decide to jump in. Trying to catch a falling knife can work on occasion, but most of the time, the odds are stacked too heavily against you. As Warren Buffett simply put it, "Turnarounds seldom turn."

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! 

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. International Coal Group is a Motley Fool Hidden Gems Pay Dirt pick. The Fool's disclosure policy is always the big winner.