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 top ratings of four or five stars:


Yesterday's Gain

Harvest Energy Trust (NYSE:HTE)


Energy Conversion Devices (NASDAQ:ENER)


Penn West Energy Trust (NYSE:PWE)


Honeywell International


Freeport-McMoRan (NYSE:FCX)


There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, like low-rated Sears Holdings (NASDAQ:SHLD): Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 140,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 99.5% of the 402 All-Star members who've rated Harvest Energy have a bullish opinion of the stock. In late July, one of those top Fools, Alex1453, explained that the Canadian energy income trust simply needed to be trusted:

Regardless of how "green" anyone thinks they can be or what (if any) energy legislation gets passed, the truth is that there is no conceivable way that any large economy can fully disavow oil and natural gas. So basically, this company is going to be around for a while, has a sellable product, and will still/always offer a reasonable to high dividend.

Harvest is up 84% since that call. In fact, yesterday's massive surge came after Korea National Oil Corp. said it would purchase Harvest for $1.7 billion, representing a 37% premium over Wednesday's closing price.

The bullish lesson?
Learn to think like a business owner, not a stock trader. All sorts of noise can suppress a stock's price in the short term, but true investors focus on the factors that really count over time. As CAPS' Alex1453 demonstrates, by gobbling up attractive assets at bargain prices, you give yourself plenty of "upside" opportunities -- including getting bought by one of the big boys -- to earn an outsized return.

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


Yesterday's Loss

Affymetrix (NASDAQ:AFFX)




Life Time Fitness


Hershey Company


Java Microsystems


While yesterday's drop in highly rated Amgen (NASDAQ:AMGN) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Earlier this year, for instance, CAPS All-Star zzlangerhans shared some rather bearish findings on Affymetrix. Here's an excerpt:

Revenues have been stagnant and equipment sales have actually been decreasing. ... As fewer people purchase and use the equipment, reagent sales will decline more sharply and quarterly losses will accelerate. ... Affymetrix's problems appear to be competition-related rather than economy-related.

In line with that warning, shares of Affymetrix plunged yesterday. The genetic analysis instrument maker posted a wider-than-expected quarterly loss and issued fourth-quarter revenue guidance that disappointed Wall Street.

The bearish takeaway?
Never underestimate the ravages of competition. Having a powerful economic moat ultimately drives superior returns on capital. As Warren Buffett reminds us, "The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."

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 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. Sears Holdings is a Motley Fool Inside Value recommendation. The Fool's disclosure policy is always the big winner.