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 unusual trading activity. Oftentimes, that can be institutional activity … i.e. smart 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 are Match Group, Inc. (MTCH), Ollie's Bargain Outlet Holdings, Inc. (OLLI), Paycom Software, Inc. (PAYC), Shopify Inc. (SHOP) and The Trade Desk, Inc (TTD).

For Mapsignals, we believe that the true tell on the near-term trajectory of the stock lies in the trading activity of the shares. 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 Match Group, Inc. (MTCH), which is a leader in online dating. The company owns popular websites and apps such as match.com and Tinder. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. A few of these factors for Match Group include:

  • Year-to-date (YTD) outperformance vs. market: +48.3% vs. SPDR S&P 500 ETF (SPY)
  • YTD outperformance vs. technology sector: +43.3% vs. Technology Select Sector SPDR Fund (XLK)
  • Recent bullish unusual trading signals

Just to show you graphically what our unusual trading activity signal looks like, have a look at all of the unusual institutional (UI) alerts made by the stock. Match Group has shown a strong chart over the past few years. Green bars are showing UI buys. It is clear there is a lot of green going on with this stock. That's exactly what you want to see when looking for a great growth name.

Chart showing the unusual institutional (UI) signals made by Match Group, Inc. (MTCH)
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, Match Group has a solid fundamental history:

  • Q1 2019 year-over-year (YoY) revenue growth rate: +14%
  • Q1 2019 YoY diluted EPS growth rate: +27%

(Disclosure - Match Group is owned by IAC, which is also the parent company of Investopedia)

Next up is Ollie's Bargain Outlet Holdings, Inc. (OLLI), which is a top discount retailer. The company is known for offering brand name merchandise at a discounted price. 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 Ollie's has grabbed our attention:

  • YTD outperformance vs. market: +38.86% vs. SPY
  • One-year outperformance vs. discretionary sector: +37.55% vs. Consumer Discretionary Select Sector SPDR Fund (XLY)
  • Recent bullish unusual trading signals

Below are the UI signals Ollie's stock has made over the past year:

Chart showing the unusual institutional (UI) signals made by Ollie's Bargain Outlet Holdings, Inc. (OLLI)
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, Ollie's has solid fundamentals:

Another growth name to consider is Paycom Software, Inc. (PAYC), which is a cloud-based human capital management software leader. When we decide on the strongest candidate for long-term growth, we want to see increasing volumes alongside price gains. A few areas we like for Paycom are:

  • YTD outperformance vs. market: +56.41% vs. SPY
  • YTD outperformance vs. technology sector: +51.41 vs. XLK
  • Historical bullish unusual trading signals

Below are the UI signals Paycom stock has made over the past year:

Chart showing the unusual institutional (UI) signals made by Paycom Software, Inc. (PAYC)
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. Paycom's growth rate is impressive. Just look at the recent figures:

  • Q1 2019 YoY revenue growth rate: +30%
  • Q1 2019 YoY GAAP net income growth rate: +15%

Number four on the list is Shopify Inc. (SHOP), which is a leading e-commerce software company. It is well known for its all-in-one package for websites. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. A few positives for Shopify include:

  • YTD outperformance vs. market: +85.6% vs. SPY
  • YTD outperformance vs. technology sector: +80.6% vs. XLK
  • Recent bullish unusual trading signals

Below are the UI signals Shopify stock has made over the past year:

Chart showing the unusual institutional (UI) signals made by Shopify Inc. (SHOP)
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, Shopify has been growing nicely:

  • Q1 2019 YoY revenue growth rate: +50%
  • Q1 2019 YoY subscription solutions growth rate: +40%

Our last growth candidate this month is The Trade Desk, Inc. (TTD), which is a leading online advertising company. It specializes in all forms of digital media advertising. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. Some reasons for bullishness on The Trade Desk are:

  • YTD outperformance vs. market: +55.15% vs. SPY
  • YTD outperformance vs. technology sector: +50.15% vs. XLK
  • Recent bullish unusual trading signals

Below are the UI signals The Trade Desk stock has made over the past year. You can see that this stock has been in a steady uptrend and has recently pulled back after earnings.

Chart showing the unusual institutional (UI) signals made by The Trade Desk, Inc (TTD)
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, The Trade Desk is in growth mode:

  • Q1 2019 YoY revenue growth rate: +41%
  • Q1 2019 YoY adj. EBITDA margin growth rate: +20%

The Bottom Line

Shares of Match Group, Ollie's, Paycom, Shopify and The Trade Desk represent a potential buying opportunity for the long-term investor. Given the strong historical revenue and earnings growth, as well as multiple top-rated buy signals from unusual trading, these stocks could be worth a spot in a growth-oriented portfolio.

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

Disclosure: The author holds a long position in Ollie's shares and no positions in Match Group, Paycom, Shopify and The Trade Desk at the time of publication.