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:


Yesterday's % Gain

InterDigital (NASDAQ:IDCC)




Novo Nordisk


Gilead Sciences


Abbott Labs


There's a reason why I selected those notable gainers, as opposed to other winners making noise on Monday, like low-rated Fifth Third Bancorp (NASDAQ:FITB). Stocks go up all the time, but unless you were able to predict the pop, what does it matter?  

Our community of more than 130,000 CAPS Fools considers its "high-star" stocks the most likely to outperform the market.

Written in the (five) stars?
For example, 94.7% of the 284 All-Star members who've rated InterDigital have a bullish opinion of the stock. In January, one of those Fools, TMFMattyA, explained how the wireless technology provider has a license to print money:

With a lucrative new 3G licensing agreement in place and with many more on the horizon (thanks to its now legitimized patents), expect InterDigital's $188 million cash hoard to grow to the moon. You want to sell wireless handsets in the U.S. -- that's you Apple, LG, Nokia, [Research In Motion], Samsung, etc. -- you've got to pay InterDigital. It's as simple as that.

Consistent with that call, shares of InterDigital soared yesterday after announcing a 26% cut of its workforce as part of a plan to stop making chips and instead focus solely on licensing them. InterDigital expects the move to save about $33 million annually in pre-tax costs.  

The bullish lesson?
Always be on the hunt for massive economic moats. A sustainable competitive advantage is the best indicator of long-term success, so if you've identified one of the more powerful ones at play -- network effects, cost advantages, high switching costs, or in InterDigital's case, vaunted intellectual property -- you might be on to something. As Warren Buffett once said, "The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."

And now for the losers ...
Of course, winning isn't everything in the stock market.

Here are five of Monday's biggest decliners with a one- or two-star rating:   


Yesterday's % Loss

General Motors (NYSE:GM)


Capital One Financial (NYSE:COF)


Prudential Financial (NYSE:PRU)


Hartford Financial (NYSE:HIG)




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

Did CAPS call the fall?
On Thursday, for instance, CAPS All-Star jmt587 made this rather prescient call on General Motors:

[T]heir business model and cost structure is outdated and unsustainable, and will force them into bankruptcy so they can reorganize and become a stronger company in the future. … Management and the politicians will find the necessary steps too unpalatable until they have no choice (i.e. forced by a bankruptcy judge).

Of course, just as jmt587 had warned, shares of GM plunged yesterday after the White House rejected GM’s turnaround plan, removed CEO Rick Wagoner, and supplied a fresh dose of bankruptcy fears.

The bearish takeaway?
Never confuse a one-week pop for a multi-year trend. As CAPS' jmt587 understands, if a company's operating capacity is completely out of whack with its operating environment, it's only a matter of time before the stock starts to reflect it. Like Benjamin Graham once said, "In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

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! 

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. InterDigital and Apple are Motley Fool Stock Advisor selections. Novo Nordisk is a choice of Global Gains. Nokia is a Motley Fool Inside Value selection. The Fool's disclosure policy is always the big winner.