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:

There's a reason I selected those notable gainers, as opposed to other winners making noise on Monday, like low-rated Ford Motor (NYSE:F). 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, 96.7% of the 183 All-Star members who've rated Philips have a bullish opinion of the stock. One year ago, one of those top Fools, masher41, explained why the Dutch conglomerate looked too cheap to pass up:

[I]f you bought the company and sold its parts, the stock is worth considerably more than $17. [Philips] is moving aggressively into LED lighting products, playing off of the energy savings craze throughout the world. With the aging of the industrialized world's population, [Philips'] medical products will also provide solid growth in the near future.

Shares of Philips are up more than 54% since that call. In fact, yesterday's pop came after the company returned to profitability in the fourth quarter on improving demand across all of its divisions.

The bullish lesson?
Learn to be long-term greedy when others are short-term fearful. Going against the herd is never easy, but if you truly believe in a company's long-run potential, major downturns can offer the very best buying opportunities. As Warren Buffett reminds us, "Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."

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 highly rated Mahindra Satyam may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
In 2008, for instance, CAPS member DouglasRich warned that 1-800-Flowers smelled a little funky:

I don't get the appeal of this company. They're well run, but does anyone really know people who use them? There's no shortage of online florists offering the same quality with less expensive prices. I usually hear 1800Flowers mentioned by friends as a comparison rate.

Including yesterday's loss, shares of the online florist are down 72% since that underperform call.

The bearish takeaway?
Trust your own eyes above all else. Just as it might pay to "buy what you know," it's probably a good idea to stay away from stocks whose services you'll never consider using due to high price and/or low quality. Due diligence is always required, but as CAPS' DouglasRich understands, if you won't be satisfied as a customer, it might be a stretch to think you'll be happy as an investor. 

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!