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 DryShips (NASDAQ:DRYS): 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, 97% of the 1,565 members who've rated Hercules Offshore have a bullish opinion of the stock. In late March, one of those Fools, slm34, helped Fools drill down on the shallow-water driller:

The only structural changes that have occurred over the past year were beyond [Hercules'] control -- i.e. the volatile price of crude. This remains one of the best enterprises and it will outlast this short-lived phase of the global markets, as energy demand, and with it, the demand for oil, will grow into the future.

After yesterday's double-digit pop, shares of Hercules are now up more than 150% since that call.

The bullish lesson?
When an attractive business takes a beating, always try to figure out why. If Mr. Market's punishment seems to make no sense, given the company's long-term supply/demand outlook, it might be the perfect time to jump in. As Warren Buffett recommends, "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:   

While yesterday's loss in five-star Corning (NYSE:GLW) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Last month, for instance, CAPS All-Star ChrisGraley predicted that Cott's amazing price run would finally fizzle out:

We're coming up on a nasty drop. Does anybody drink anything that this company makes? The only news I've seen about them is that [Wal-Mart Stores (NYSE:WMT)] is going to stop selling their product. This one is way overbought and will drop like a rock.

Consistent with that bear call, shares of the soft-drink maker plunged more than 25% yesterday after the company cut its full-year earnings outlook on increasing competition and rising commodity prices.

The bearish takeaway?
Never confuse a booming price for better fundamentals. Any stock can surge on sheer enthusiasm, but if those expectations aren't rooted in economic reality, it's just a matter of time before your rocket stock turns torpedo. As Buffett reminds us: "For some reason, people take their cues from price action rather than from values. … The dumbest reason in the world to buy a stock is because it's going up."

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!