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:
|
Company |
Yesterday's Gain |
|---|---|
|
Sun Hydraulics (NASDAQ:SNHY) |
8.13% |
|
LDK Solar (NYSE:LDK) |
6.88% |
|
Silver Wheaton (NYSE:SLW) |
4.23% |
|
Penn West Energy Trust (NYSE:PWE) |
4.11% |
|
Verizon Communications (NYSE:VZ) |
2.96% |
There's a reason I selected those notable gainers, as opposed to other winners making noise on Monday, like one-star stock Diedrich Coffee. 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 highly rated stocks the most likely to outperform the market.
Written in the (five) stars?
For example, 98.9% of the 1,394 members who've rated Motley Fool Hidden Gems pick Sun Hydraulics have a bullish opinion of the stock. In late February, one of those Fools, my fellow writer Matt Koppenheffer (TMFKopp), seemed particularly pumped about the hydraulic valve maker: "Solid dividend and just a generally all-around well-run company. Will take its lumps during the slowdown, but its strong balance sheet should help it see the other side."
Including yesterday's pop, Sun Hydraulics has nearly doubled since that call.
The bullish lesson?
Don't be afraid to think small. Small-cap companies can certainly be risky, but as Matt demonstrates, singling out well-managed, cash-rich, attractively priced little guys can be great a low-risk way to multibagger returns. While most billion-dollar big-caps have their best days behind them, small-cap value stocks have tons of room to run.
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:
|
Company |
Yesterday's Loss |
|---|---|
|
GeoGlobal Resources (NYSE:GGR) |
15.44% |
|
Peet's Coffee & Tea |
13.00% |
|
Rambus |
7.62% |
|
Saks |
3.13% |
|
Liz Claiborne |
3.00% |
While yesterday's drop in five-star stock Weatherford International (NYSE:WFT) may have caught our community off guard, low-ranked stocks are fully expected to fall hard.
Did CAPS call the fall?
Just three days ago, for instance, UltraLong, the second ranked member in all of CAPS, helped prevent Fools from exploring GeoGlobal:
Worth 200 million dollars and still considered to be in the exploratory phase of their existence. Practically no revenues, decreasing cash balances and once again a quarterly report that STATES that cash will be funded through the issuance of stock. Are investors ignorant to the fact that share offering, warrants and options are dilutive?
Following yesterday's market-bucking 15% plunge, UltraLong is off to a strong start with that bearish call.
The bearish takeaway?
Always invest with a healthy dose of skepticism. There are certainly stocks out there that have the "big things" in the 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!





