Tuesday's Biggest Stock Stars

Hey there, Fools. I've summoned our Motley Fool CAPS community once again to highlight a few of Tuesday's biggest winners among the stocks with a top rating of five stars.

Without further ado:

There's a reason why I selected notable five-star gainers, as opposed to other big-name winners making noise on Tuesday, like low-rated Dell (NASDAQ:DELL). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 125,000 CAPS Fools considers its five-star stocks the most likely to outperform the market.

Written in the (five) stars?
For example, all 34 All-Star members who've rated Bruker have a bullish opinion of the stock. In late January, one of those Fools, TMFHelical, explained why the X-ray technology company radiated opportunity:

Increased [National Institutes of Health] spending should be a benefit for those companies whose product support biotechnology research. They have been beaten down with the market but maintain strong fundamentals as a group.

Shares of Bruker are beating the market by 22 points since that call. In fact, yesterday's pop came after the company topped Wall Street's fourth-quarter estimates.

The bullish lesson?
Learn to pounce on Mr. Market's short-sightedness. As TMFHelical understands, beaten-down stocks aren't always easy to jump into, but if you truly believe in a company's long-term tailwinds, market downturns offer the best opportunities to buy. Like Warren Buffett once remarked, "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 Tuesday's biggest one-star decliners:   

While yesterday's plunge in then-five-star stock Manitowoc (NYSE:MTW) may have caught our community off-guard, one-star stocks are fully expected to fall hard.

Did CAPS call the fall?
In 2007, for instance, CAPS member iLikePie was already raising the red flags on Developers Diversified: "Recent downgrade by Deutsche, slightly slowing economy resulting in less retail spending, which in turn results in slower expansion and development of retail shopping centers … this co's primary arena."

Not surprisingly, shares of the shopping-mall operator are down a gut-wrenching 97% since that call.

The bearish takeaway?
Always try to anticipate the chain of events that might lead to your stock being squashed. One of the biggest mistakes we make as investors, Charlie Munger wrote, is failing to consider second-, third-, and higher-order effects when analyzing a company's risk exposures. "This defect is quite understandable, because the consequences have consequences, and the consequences of the consequences have consequences, and so on," said Munger.

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!