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:


Yesterday's Gain

Bucyrus International (NASDAQ:BUCY)




Alcoa (NYSE:AA)


U.S. Steel (NYSE:X)


Mosaic (NYSE:MOS)


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

Our community of more than 145,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 98.2% of the 280 All-Star members who've rated Bucyrus have a bullish opinion of the stock. One year ago, one of those top Fools, BSHumphreyII, highlighted the mining equipment maker as a potent "picks and shovels" pick:

Considering its explosive earnings growth, Bucyrus is absurdly cheap right now. ... I know commodities have crashed, but that doesn't mean every mine in the world is going to close up! Contracts with multi-national mining corporations will keep Bucyrus in business until commodities recover and its customers begin to expand operations again.

Shares of Bucyrus have more than tripled since that call. In fact, yesterday's pop came after the company announced plans to purchase construction machinery maker Terex's mining equipment segment for $1.3 billion.

The bullish lesson?
Learn to pounce on stocks priced for imperfection. It's virtually impossible to call a stock's "bottom," but if you're confident that the risks are already baked into the valuation, there's a good chance your investment will turn out well over time. As Warren Buffett reminds us, "Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."

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:


Yesterday's Loss

OncoGenex Pharmaceuticals (NASDAQ:OGXI)


Cytori Therapeutics


China Automotive Systems


FuelCell Energy


Playboy Enterprises


While yesterday's plunge in five-star stock GigaMedia may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
This past summer, for instance, the top ranked member in all of CAPS, UltraLong, voiced skepticism over OncoGenex's surging stock. Here's an excerpt:

What we have here is a very big pile of stupid! Thats a technical term and feel free to quote me on that! ... Not even the tooth fairy could deliver such wild fantasies as we've seen over the past 6 weeks. [OncoGenex] is now trading at over 17 times price to book and since they didn't earn a DIME in revenue last year, well an infinite amount to revenue ... [OncoGenex] has to deal with raising cash and minimizing the losing of that cash if it hopes to even remain a viable company.

Consistent with that bearishness, shares of the biotech plunged over 25% yesterday after investors criticized the company's newly signed licensing agreement with Israel's Teva Pharmaceuticals (NASDAQ:TEVA) -- a deal that basically gives away its potential cancer treatment OGX-011 for just $60 million, not including milestone payments. And a good portion of it has to be paid to a co-discoverer.

The bearish takeaway?
Always follow the cash flow. Investing, after all, is about laying out money today in order to receive more of it in return tomorrow. As CAPS' UltraLong understands, if a business continuously burns through large amounts of cash, while having little hope for any near-term relief, chances are you won't see a return of your capital, much less a return on your capital.

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 retire wealthy.

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. The Fool owns shares of Terex. The Fool's disclosure policy is always the big winner.