Thursday's Biggest Stock Stars

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 four or five stars.

Without further ado:

There's a reason why I selected those notable gainers, as opposed to other winners making noise on Thursday, like one-star stock Palm (NASDAQ:PALM). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 135,000 CAPS Fools considers its "high-star" stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 98.1% of the 533 All-Star members who've rated Yingli have a bullish opinion of the stock. In December, one of those Fools, FoolSolo, explained why the Chinese solar cell maker would soon have its day in the sun:

[Yingli] is in a sector dreadfully out of favor at this time, which is good for investors. Despite strong orders and sales projections for 2009, [Yingli] keeps getting beat up. It could go lower, but I'm willing to bet it won't go all that much lower, and the upside potential is huge for this company, especially when oil starts to climb again.

With the help of yesterday's double-digit pop, Yingli is up a spectacular 275% since that call.

The bullish lesson?
When the stock of an attractive business takes a beating, always try to figure out why. If Mr. Market's punishment seems to make no sense, given the market's real demand profile, it might be the perfect time to jump in. As Warren Buffett recently wrote, "When investing, pessimism is your friend, euphoria the enemy."

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

Here are five of Thursday's biggest decliners with a one- or two-star rating:  

While yesterday's drop in highly rated Satyam Computer may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Last month, for instance, CAPS All-Star mikecart1 wrote that Abercrombie looked all worn out:

Overpriced clothing that no one cares about seeing you wear. ... Their clothing fits a niche group of people -- medium to higher income, teens, fit/thin people, and those that value name brand clothing. With many better cheaper options that fit a larger % of sizes of the population, [Abercrombie] will not beat S&P500 anytime soon.

Consistent with that call, shares of the teen retailer sank yesterday after its same-store sales fell 28% in May.

The bearish takeaway?
Always know where you're exposed. One of the most common mistakes we make as investors is underestimating how sensitive a business model can be to specific economic and industry-related variables. As CAPS' mikecart1 understands, buying into high-end retailers at a time when consumers are putting the squeeze on spending might spell trouble.

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!