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 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 140,000 CAPS Fools considers its high-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 96.3% of the 4,261 members who've rated Motley Fool Hidden Gems pick Ctrip have a bullish opinion of the stock. Late last year, one of those Fools, JMJeffrey, explained why the travel website would take off once again:

[Ctrip] is a very well managed Chinese company which facilitates travel and lodging within China. Should do well, right? ... Well, this economic cloud is hanging over the company right not which is causing a bit of a slowdown in its dramatic growth trajectory. So now the price is significantly cheaper than when I first bought it and the thesis and earnings are stronger. Yep, time to add.

Ctrip is up an amazing 270% since that call. In fact, yesterday's pop came after the company's third-quarter results easily soared past Wall Street estimates.

The bullish lesson?
Learn to think like a business owner, not a stock trader. Market downturns aren't easy on the stomach, but as CAPS' JMJeffrey demonstrates, they provide a rare chance to increase the ownership of your companies at highly attractive prices. In Warren Buffett's words, "Only for short-term investors and market timers is a correction not an opportunity."

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 SandRidge Energy (NYSE:SD) and may have caught our community off guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
At the beginning of last month, for instance, CAPS member Creoena wrote that Green Mountain felt too hot to hold:

While this is a great company and their growth rate is higher than almost any publicly traded company in existence, it still trades at 56.9x earnings. ... Stocks that trade as high p/e as this one are extremely risky when earnings are reported; one bad quarter and down down down it goes. Given how bad the economy has been, I would take the profits.

Consistent with that warning, shares of the specialty coffee maker sank yesterday after a disappointing first-quarter outlook overshadowed a solid, profit-doubling fourth quarter.

The bearish takeaway?
Never mistake a wonderful business for a wonderful stock. As CAPS' Creoena understands, even the greatest of companies can disappoint Mr. Market if its valuation already reflects much of that greatness. As Buffett reminds us, "Investors making purchases in an overheated [stock] need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid."

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!