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 The Trade Desk, Inc. (TTD), Thermo Fisher Scientific Inc. (TMO), Alphabet Inc. (GOOGL), Visa Inc. (V), and Microsoft Corporation (MSFT).

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 by 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 The Trade Desk, Inc. (TTD), which is a leading online advertising company that 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 bright spots for The Trade Desk include:

  • Three-month outperformance vs. market: +35.89% vs. SPDR S&P 500 ETF (SPY
  • Three-month outperformance vs. technology ETF: +30.71% 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 made by The Trade Desk. The stock has shown a strong chart over the past year. Green bars are showing that The Trade Desk 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 unusual institutional (UI) signals made by The Trade Desk, Inc. (TTD)
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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, The Trade Desk's numbers have been strong:

  • Three-year sales growth rate: +61.42%
  • One-year earnings growth rate: +11%

Next up is Thermo Fisher Scientific, Inc. (TMO), which is a top health care company. It has 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. A few of these areas for Thermo Fisher include:

  • One-month outperformance vs. market: +0.28% vs. SPY
  • One-month outperformance vs. health care ETF: +0.03% vs. Health Care Select Sector SPDR Fund (XLV)
  • Recent big money signals

Below are the top buy signals Thermo Fisher Scientific stock has made since 2018. Clearly, buying was strong in 2019, and we believe that the company could be in for new buy signals:

Chart showing the unusual institutional (UI) signals made by Thermo Fisher Scientific, Inc. (TMO)
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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, Thermo Fisher has solid fundamentals:

  • Three-year sales growth rate: +12.88%
  • Three-year earnings growth rate: +14.38%

Another growth name to consider is Alphabet Inc. (GOOGL), which is a leading internet search engine 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 Alphabet are:

  • Six-month outperformance vs. market: +12.91% vs. SPY
  • Six-month outperformance vs. technology ETF: +6.48% vs. XLK

Below are the big money signals Alphabet has made since 2018. Lots of buying has been happening recently:

Chart showing the unusual institutional (UI) signals made by Alphabet Inc. (GOOGL)
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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. Alphabet's growth rate is impressive. Just look at the past few years:

  • Three-year sales growth rate: +23.01%
  • Three-year earnings growth rate: +43%

Number four on the list is Visa Inc. (V), which is a leading credit card 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 Visa being:

  • One-month outperformance vs. market: +0.07% vs. SPY 
  • One-month outperformance vs. financials ETF: +0.95% vs. Financial Select Sector SPDR Fund (XLF)
  • Recent big money signals

Below are the big money signals that Visa has made over the past two years:

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

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

Our last growth candidate is Microsoft Corporation (MSFT), which is a leading software company. It 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 Microsoft including:

  • Three-month outperformance vs. market: +5.40% vs. SPY 
  • Three-month outperformance vs. technology sector: +0.22% vs. XLK
  • Recent bullish big money signals

Below are the big money signals Microsoft stock has made over the past two years. You can see that this stock has been in a steady uptrend:

Chart showing the unusual institutional (UI) signals made by Microsoft Corporation (MSFT)
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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, Microsoft has grown over the past few years:

  • Three-year sales growth rate: +14.24%
  • Three-year earnings growth rate: +48.46%

The Bottom Line

The Trade Desk, Thermo Fisher Scientific, Alphabet, Visa, and Microsoft shares 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.

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

Disclosure: The author holds long positions in Alphabet, Visa, and Microsoft, but no positions in The Trade Desk and Thermo Fisher Scientific at the time of publication.