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 top ratings of four or five stars:

There's a reason I selected those notable gainers, as opposed to other winners making noise on Thursday, like low-rated Starbucks (NASDAQ:SBUX). 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, 97.1% of the 656 members who've rated Motley Fool Global Gains pick General Steel have a bullish opinion of the stock. In September, one of those Fools, JMJeffrey, explained why the Chinese steel company seemed like a solid selection:

If China is to grow they will need steel. They will buy steel from a lot of different companies but they will buy local if the quality is sufficient. I believe that [General Steel] has the right management and enough government blessing to survive the inevitable [state-owned enterprise] consolidation and come out on the other side as a winner.

Including yesterday's pop, shares of General Steel are already up 33% since that call.

The bullish lesson?
Learn to combine the best of both small-cap and global investing strategies. By buying into proven small-caps domiciled in attractive foreign markets, you earn the double benefit of owning a business that has plenty of room to rocket, while getting paid in non-U.S.-denominated cash flows. As long as you're cognizant of price, international small caps offer a great way to play both offense and defense.

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:

While yesterday's drop in five-star stock ReneSola 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, CAPS member TraderHater highlighted FuelCell as a pricey alternative:

Fuel cells are outrageously expensive to build, and I'm not talking solar cell expensive, I mean stratospheric expensive. Fuel cells ARE NOT like solar, where they have been having large investments and new technological developments, like thin-film solar. I mean, look at their income statement, they are selling huge set ups for less than cost.

Shares of the fuel cell power plant developer have fallen 27% since that warning. In fact, yesterday's plunge came after the company posted a quarterly loss of $16.2 million, as revenue sank 22%.

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 reminds us, "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 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!