For years, growth stocks have been beneficiaries of outsized gains compared to the averages. The main criteria we look for when betting on upside in a stock are improving fundamentals, great entry points (technicals), and a history of bullish trading activity in the shares.

The hallmark way we go about finding the best stocks – the outliers – is by looking for quiet, unusual trading activity. Oftentimes, that can be institutional activity… i.e. big money. We'll go over what that unusual trading activity looks like in a bit. But the five stocks we see as long-term candidates this month are Advanced Micro Devices, Inc. (AMD), salesforce.com, inc. (CRM), Facebook, Inc. (FB), NVIDIA Corporation (NVDA), and Paycom Software, Inc. (PAYC).

At Mapsignals, we believe that the true tell on the near-term trajectory of a stock lies in its trading activity. The bottom line here is that the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than simply looking at a company's financials alone. We want the odds on our side when looking for the highest-quality stocks.

Up first is Advanced Micro Devices, Inc. (AMD), which is a leading semiconductor company. The company recently released a strong earnings report. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. The following are a few areas in which AMD stock has captured our attention year to date (YTD):

  • YTD outperformance vs. market: +85.92% vs. SPDR S&P 500 ETF (SPY
  • YTD outperformance vs. semiconductor ETF: +62.08% vs. VanEck Vectors Semiconductor ETF (SMH)
  • Recent big money signals

Just to show you graphically what our unusual trading activity (big money) signals look like, have a look at all of the top buy signals in the chart below. AMD has shown a strong chart over the past year. Green bars are showing that AMD was likely being bought by an institution according to Mapsignals. It is clear that there is a lot of green recently with this stock. That's exactly what you want to see when looking for a great growth name.

Chart showing the top-rated buy signals made by
www.mapsignals.com

On top of technicals, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, AMD's numbers have been strong:

  • Three-year sales growth rate: +17.76%
  • Three-year earnings growth rate: +340.39%

Next up is salesforce.com, inc. (CRM), which is a top software company for businesses. The company have been growing nicely with big money buying. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for salesforce being:

  • One-month outperformance vs. market: +5.09% vs. SPY 
  • YTD outperformance vs. technology ETF: +3.76% vs. Technology Select Sector SPDR Fund (XLK)
  • Recent big money signals

Below are the top buy signals that salesforce stock has made since 2017. Clearly, buying was strong in 2017 and 2018, and we think the company could be in for new buy signals:

Chart showing the top-rated buy signals made by
www.mapsignals.com

On top of a great long-term technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, salesforce has solid fundamentals:

  • Three-year sales growth rate: +25.83%
  • Three-year earnings growth rate: +345.73%

Another growth name to consider is Facebook, Inc. (FB), which is a leading social media company. When we decide on the strongest candidate for long-term growth, we want to see increasing volumes as the price gains. A few technical areas we like for Facebook are:

  • YTD outperformance vs. market: +25.51% vs. SPY 
  • YTD outperformance vs. technology ETF: +10.58% vs. XLK

Below are the big money signals Facebook stock has made since 2017. We expect buying to resume soon:

Chart showing the top-rated buy signals made by
www.mapsignals.com

On top of a strong technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. Facebook's growth rate is impressive. Just look at the past few years:

  • Three-year sales growth rate: +46.20%
  • Three-year earnings growth rate: +88.44%

Number four on the list is NVIDIA Corporation (NVDA), which is a leading semiconductor company. The shares have been in bull mode for years. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for NVIDIA being:

  • YTD outperformance vs. market: +32.31% vs. SPY 
  • YTD outperformance vs. semiconductor ETF: +8.47% vs. SMH
  • Recent big money signals

Below are the big money signals that NVIDIA has made over the past three years:

Chart showing the top-rated buy signals made by
www.mapsignals.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, NVIDIA has been growing nicely:

  • Three-year sales growth rate: +33.04%
  • Three-year earnings growth rate: +90.54%

Our last growth candidate is Paycom Software, Inc. (PAYC), which is a leading software company. The company has been growing rapidly, and the shares have been on a tear. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for Paycom being:

  • YTD outperformance vs. market: +88.87% vs. SPY
  • YTD outperformance vs. technology sector: +73.94% vs. XLK
  • Recent bullish big money signals

Below are the big money signals Paycom has made over the past few years. You can see that this stock has been in a steady uptrend with dips being bought.

Chart showing the top-rated buy signals made by
www.mapsignals.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Paycom has grown over the past few years:

  • Three-year sales growth rate: +36.29%
  • Three-year earnings growth rate: +87.67%

The Bottom Line

Shares of Advanced Micro Devices, salesforce, Facebook, NVIDIA, and Paycom represent a potential buying opportunity for the long-term investor. Given the strong historical revenue and earnings growth, as well as multiple big money buy signals from unusual trading, these stocks could be worth a spot in a growth-oriented portfolio. 

Disclosure: The author holds a long position in salesforce stock but no positions in Advanced Micro Devices, Facebook, NVIDIA, and Paycom at the time of publication.

To learn more about Mapsignals’ institutional signals please visit our "About Us" page.