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 Etsy, Inc. (ETSY), RingCentral, Inc. (RNG), Globant S.A. (GLOB), Marvell Technology Group Ltd. (MRVL), an The Trade Desk, Inc. (TTD).

For Mapsignals, we believe 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 Etsy, Inc. (ETSY), which is a leading e-commerce site devoted to handcrafted creations. It has been a very popular online destination in the past few years. 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 Etsy stock has attracted our attention year to date (YTD):

  • YTD outperformance vs. market: +137.26% vs. SPDR S&P 500 ETF Trust (SPY
  • YTD outperformance vs. discretionary ETF: +132.09% vs. Consumer Discretionary Select Sector SPDR Fund (XLY)
  • Recent big money signals

Just to show you graphically what our unusual trading activity (big money) signal looks like, have a look at all of the top buy signals posted by the stock. Etsy has shown a strong chart over the past few years. Green bars are showing that Etsy stock 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 institutional buy signals posted by Etsy, Inc. (ETSY)
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, Etsy's numbers have been strong.

  • Three-year sales growth rate: +31.09%
  • Three-year earnings growth rate: +8.87%

Next up is RingCentral, Inc. (RNG), which is a leading online communications company. The stock has had a very bullish chart over the past year. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for RingCentral being:

  • YTD outperformance vs. market: +77.30% vs. SPY
  • YTD outperformance vs. technology ETF: +59.86% vs. Technology Select Sector SPDR Fund (XLK)
  • Historical big money signals

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

Chart showing the top-rated buy signals posted by RingCentral, Inc. (RNG)
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, RingCentral has strong sales growth, while earnings growth has been negative.

  • Three-year sales growth rate: +33.47%
  • Three-year earnings growth rate: -25.83%

Another growth name to consider is Globant S.A. (GLOB), which is a leading IT and digital 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 Globant are:

  • YTD outperformance vs. market: +38.93% vs. SPY 
  • YTD outperformance vs. technology ETF: +21.49% vs. XLK

Below are the big money signals Globant stock has made since 2018. Buy signals occurred in mid-2019, which succumbed to selling along with the market, but they are rallying again.

Chart showing the top-rated buy signals posted by Globant S.A. (GLOB)
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. Globant's growth rate is impressive. Just look at the past few years.

  • Three-year sales growth rate: +26.87%
  • Three-year earnings growth rate: +17.31%

Number four on the list is Marvell Technology Group Ltd. (MRVL), which is a leading 5G semiconductor company. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for Marvell Technology being:

  • YTD outperformance vs. market: +31.23% vs. SPY 
  • YTD outperformance vs. semiconductor ETF: +21.01% vs. VanEck Vectors Semiconductor ETF (SMH)
  • Historical big money signals

Below are the big money signals that Marvell stock has made since 2018.

Chart showing the top-rated buy signals posted by Marvell Technology Group Ltd. (MRVL)
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, Marvell has been growing revenues nicely. Wall Street has been rewarding the shares.

  • Three-year sales growth rate: +5.69%
  • Three-year earnings growth rate: +968%

Our last growth candidate is The Trade Desk, Inc. (TTD), which is a leading digital advertising firm. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for The Trade Desk being:

  • YTD outperformance vs. market: +62.47% vs. SPY 
  • YTD outperformance vs. discretionary ETF: +57.3% vs. XLY
  • Recent big money signals

Below are the big money signals The Trade Desk stock has made since 2017. You can see that this stock has been a monster growth name with tons of big money signals.

Chart showing the top-rated buy signals posted 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 has grown over the past few years.

  • Three-year sales growth rate: +48.41%
  • Three-year earnings growth rate: +40.97%

The Bottom Line

Shares of Etsy, RingCentral, Globant, Marvell Technology, and The Trade Desk represent a potential buying opportunity for the long-term investor. Given the strong historical revenue and earnings growth alongside multiple big money buy signals from unusual trading, these stocks could be worth a spot in a growth-oriented portfolio.

Disclosure: The author holds no positions in Etsy, RingCentral, Globant, Marvell Technologies, or The Trade Desk at the time of publication.

Disclaimer