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 are PayPal Holdings, Inc. (PYPL), Visa Inc. (V), NIKE, Inc. (NKE), SolarEdge Technologies, Inc. (SEDG), and Facebook, Inc. (FB).

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 PayPal Holdings, Inc. (PYPL), which is a leading digital payments company. PayPal has been cruising higher for years. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. A few areas in which PayPal stock has grabbed our attention year to date (YTD) include:

  • YTD outperformance vs. market: +7.2% vs. SPDR S&P 500 ETF Trust (SPY
  • YTD outperformance vs. technology ETF: +0.23% vs. Technology Select Sector SPDR Fund (XLK)
  • 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 the stock has made since 2018. PayPal stock has shown a strong chart over the past few years. Green bars are showing that PayPal was likely being bought by an institution according to Mapsignals. It is clear that there is a lot of green historically 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 PayPal Holdings, Inc. (PYPL)
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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, PayPal's numbers have been strong:

  • Three-year sales growth rate: +17.87%
  • Three-year earnings growth rate: +21.87%

Next up is Visa Inc. (V), which is a credit card payments company. Visa has been a huge winner over the years, as it is extremely profitable. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for Visa being:

  • YTD outperformance vs. market: +6.89% vs. SPY 
  • YTD outperformance vs. payments ETF: +10.24% vs. ETFMG Prime Mobile Payments ETF (IPAY)
  • Recent big money signals

Below are the top buy signals Visa stock has made since 2018. Clearly, buying has been consistent for years:

Chart showing the top-rated buy signals made by Visa Inc. (V)
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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, Visa has solid fundamentals:

  • Three-year sales growth rate: +15.16%
  • Three-year earnings growth rate: +30.36%

Another growth name to consider is NIKE, Inc. (NKE), which is a leading athletic wear company. When we decide on the strongest candidate for long-term growth, we want to see a history of big money buying the shares. A decent pullback helps, too. A few technical areas we like for NIKE stock include:

  • YTD outperformance vs. market: +3.16% vs. SPY 
  • YTD outperformance vs. discretionary ETF: +3.82% vs. Consumer Discretionary Select Sector SPDR Fund (XLY)

Below are the big money signals NIKE stock has made since 2018. Lots of buying occurred in late 2019, which succumbed to selling along with the market:

Chart showing the top-rated buy signals made by NIKE, Inc. (NKE)
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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. NIKE's growth rate is impressive. Just look at the past few years:

  • Three-year sales growth rate: +6.42%
  • Three-year earnings growth rate: +25.55%

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

  • One-year outperformance vs. market: +127.12% vs. SPY 
  • One-year outperformance vs. solar ETF: +111.5% vs. Invesco Solar ETF (TAN)
  • Recent big money signals

Below are the big money signals that SolarEdge stock has made since 2018:

Chart showing the top-rated buy signals made by SolarEdge Technologies, Inc. (SEDG)
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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, SolarEdge has been growing nicely:

  • Three-year sales growth rate: +44.33%
  • Three-year earnings growth rate: +37.01%

Our last growth candidate is Facebook, Inc. (FB), which is a leading social media company. Facebook has been growing rapidly, and the shares have been under pressure. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for Facebook being:

  • One-year outperformance vs. market: +2.44% vs. SPY 
  • One-year outperformance vs. communications sector: +2% vs. Communication Services Select Sector SPDR Fund (XLC)
  • Recent big money signals

Below are the big money signals Facebook stock has made since 2018. You can see that this stock has pulled back nicely:

Chart showing the top-rated buy signals made by Facebook, Inc. (FB)
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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, Facebook has grown over the past few years:

  • Three-year sales growth rate: +37.02%
  • Three-year earnings growth rate: +26.07%

The Bottom Line

PayPal, Visa, NIKE, SolarEdge, and Facebook 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. 

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

Disclosure: At the time of publication, the author holds long positions in PayPal, Visa, and NIKE, but no positions in SolarEdge and Facebook.