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 financials Morgan Stanley and Citigroup (NYSE:C). 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, 98% of the 1,158 members who've rated Trinity Industries have a bullish opinion of the stock. In late February, one of those Fools, my colleague Matt Koppenheffer (TMFKopp), explained why the industrial manufacturer would eventually pick up steam:

I can't see the demand for rail cars to pick up dramatically in the near term, but the company has some interesting diversification in its road construction and energy businesses. Recessions don't last for ever and neither do rail cars, so eventually demand for the main business should come back as well.

Shares of Trinity are already up 67% since that pitch. In fact, yesterday's double-digit pop came after a Wall Street analyst upgraded the stock, citing lower fixed costs in the railcar business and an increase in wind projects -- consistent with Matt's bull call.

The bullish lesson?
Learn to pounce on Mr. Market's short-sightedness. Going against the herd is never easy, but if you truly believe in a company's long-term tailwinds, significant slowdowns offer the very best opportunity to buy. As Warren Buffett once said, "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."

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 drop in highly rated CapitalSource (NYSE:CSE) may have caught our community off-guard, low-ranked stocks are fully expected to fall hard.

Did CAPS call the fall?
Last year, for instance, CAPS member vladdfool offered a dose of reality on Osiris' prospects:

Stem cell space still extremely risky with little hope for improvement over the next few years. Having worked with these cell lines, I can only say, it takes YEARS to get any positive experimental data worth anything, much less FDA approval and market acceptance. ... [T]his company loses lots and lots of money, and will continue to do so for quite some time to come.

After yesterday's market-bucking loss, shares of the stem cell drug maker are down 14% since that call.

The bearish takeaway?
Always invest with a healthy dose of skepticism. There are certainly stocks out there that have the "next big thing" in their pipeline, but unless you have exceptional insight in identifying them, there's really no need to take such long-shot bets. As CAPS' vladdfool understands, any idea can be bid up on enthusiasm, but if the expectations aren't rooted in economic reality, it's just a matter of time before your rocket stock turns torpedo.

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!