Monday's Biggest Stock Stars

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 top ratings 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 Monday, like low-rated Las Vegas Sands (NYSE:LVS): 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, 95% of the 705 All-Star members who've rated U.S. Steel have a bullish opinion of the stock. In early March, one of those top Fools, noptov52, explained why the stock seemed like a particularly solid, ahem, steal:

Sales are down and operating costs are not ideal, but this stock is being priced as if news was much worse. After dropping over 90%, a huge amount of risk has been priced in and US Steel's downside appears to be limited. With low debt and attractive financials, US Steel is positioned to outperform the S&P 500.

Shares of U.S. Steel are up about 150% since that call. In fact, shares of several highly rated metal makers surged yesterday as reports on U.S. manufacturing activity and construction spending signaled that the economy is starting to pick up.

The bullish lesson?
In investing, it's far more important keep your head down than up. As long as you make a conscious effort to limit your downside, magnificent multibagger returns usually just take care of themselves. Like value superinvestor Seth Klarman reminds us, "Rather than targeting a desired rate of return, even an eminently reasonable one, investors should target risk."

And now for the losers ...
Of course, winning isn't everything in the stock market. Here are five of Monday's biggest decliners with one- or two-star ratings:

While yesterday's drop in five-star health insurer UnitedHealth (NYSE:UNH) may have caught our community off-guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Just last month, for instance, CAPS All-Star JPG101 made a rather savvy call on Savient:

$850 million mkt cap for a non profitable company which is basing its hopes on a 3rd line gout drug. Get real! Might get a short term bounce from an approval but the market for this might be limited to say the least. Will the drug come with a black box warning?

Consistent with that bear call, shares of the baby biotech plunged yesterday, after the FDA turned down as submitted Savient's gout treatment, Krystexxa. The agency cited the "deficiencies with the chemistry, manufacturing and controls" section of the application.

The bearish takeaway?
Always invest with a healthy dose of skepticism. There are certainly stocks out there that have the "next big thing" in their pipeline, but unless you have exceptional insight in identifying them, there's really no need to take such long-shot bets. As Warren Buffett tells it, "Sound investing can make you very wealthy if you're not in too big of a hurry. And it never makes you poor, which is even better."

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!