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 big money trading activity looks like in a bit. But the five stocks we see as long-term growth candidates are Keysight Technologies, Inc. (KEYS), Advanced Micro Devices, Inc. (AMD), Fulgent Genetics, Inc. (FLGT), Generac Holdings Inc. (GNRC), and Peleton Interactive, Inc. (PTON).

For 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 Keysight Technologies, Inc. (KEYS), which is a leading semiconductor company. Keysight shares have been marching higher in 2020. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. The following are a few ways in which Keysight Technologies stock has caught our attention year to date (YTD):

  • YTD outperformance vs. market: +7.76% vs. SPDR S&P 500 ETF Trust (SPY
  • YTD outperformance vs. technology ETF: +7.56% vs. Technology Select Sector SPDR Fund (XLK)
  • Recent big money signals

Just to show you graphically what our big money activity signals look like, have a look at all of the top buy signals posted by the stock. Keysight has shown a strong chart over the past few years. Green bars are showing that Keysight stock 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 posted by Keysight Technologies, Inc. (KEYS)

www.mapsignals.com; end-of-day data sourced from Tiingo.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, Keysight's revenue growth has been strong:

  • Three-year sales growth rate: +10.21%
  • Three-year earnings growth rate: +110%

Next up is Advanced Micro Devices, Inc. (AMD), which is another leading semiconductor company. AMD shares have been booming recently. When we decide on the strongest candidate for long-term growth, we typically want to see an outperformer. AMD is just that:

  • Three-month outperformance vs. market: +0.73% vs. SPY 
  • YTD outperformance vs. technology ETF: -1.39% vs. XLK
  • Historical big money signals

Below are the top buy signals Advanced Micro Devices stock has made since 2019. That is a strong uptrend recently:

Chart showing the top-rated buy signals posted by Advanced Micro Devices, Inc. (AMD)

www.mapsignals.com; end-of-day data sourced from Tiingo.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, AMD has strong sales and earnings growth:

  • Three-year sales growth rate: +16.73%
  • Three-year earnings growth rate: +322%

Another growth name to consider is Fulgent Genetics, Inc. (FLGT), which is a leading genetic testing company. When we decide on the strongest candidate for long-term growth, we want to see stock leadership. Those could be the next outlier stocks. A few technical areas we like for Fulgent are:

  • YTD outperformance vs. market: +31.55% vs. SPY 
  • YTD outperformance vs. health care ETF: +30.02% vs. Health Care Select Sector SPDR Fund (XLV)

Below are the big money signals Fulgent Genetics stock has made since 2019. It has only one green signal:

Chart showing the top-rated buy signals posted by Fulgent Genetics, Inc. (FLGT)

www.mapsignals.com; end-of-day data sourced from Tiingo.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. Fulgent's growth rate is impressive. Just look at the past few years:

  • Three-year sales growth rate: +22.94%
  • Three-year earnings growth rate: +18.72%

Number four on the list is Generac Holdings Inc. (GNRC), which is a leader in home generator equipment  When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for Generac being:

  • YTD outperformance vs. market: +15.49% vs. SPY 
  • YTD outperformance vs. industrials ETF: +19.02% vs. Industrial Select Sector SPDR Fund (XLI)
  • Historical big money signals

Below are the big money signals that Generac stock has made since 2019:

Chart showing the top-rated buy signals posted by Generac Holdings Inc. (GNRC)

www.mapsignals.com; end-of-day data sourced from Tiingo.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, Generac has been growing revenues handsomely. Wall Street has been rewarding the shares:

  • Three-year sales growth rate: +15.23%
  • Three-year earnings growth rate: +41.26%

Our last growth candidate is Peloton Interactive, Inc. (PTON), which is a leading interactive fitness platform company. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for Peloton being:

  • YTD outperformance vs. market: +0.76% vs. SPY 
  • YTD outperformance vs. discretionary ETF: -2.62% vs. Consumer Discretionary Select Sector SPDR Fund (XLY)
  • Recent big money signals

Below are the big money signals Peloton has made since 2019. You can see that this stock has been ramping up recently:

Chart showing the top-rated buy signals posted by Peloton Interactive, Inc. (PTON)

www.mapsignals.com; end-of-day data sourced from Tiingo.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, Peloton has been growing sales rapidly:

  • Three-year sales growth rate: +102.96%
  • Three-year earnings growth rate: -93.33%

The Bottom Line

Shares of Keysight, Advanced Micro Devices, Fulgent Genetics, Generac, and Peloton represent a potential buying opportunity for the long-term investor. Given strong historical revenue and earnings growth alongside multiple big money buy signals, these stocks could be worth a spot in a growth-oriented portfolio. 

Disclosure: At the time of publication, the author holds no positions in any of the securities mentioned.

Disclaimer