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 Teradyne, Inc. (TER), Edwards Lifesciences Corporation (EW), ResMed Inc. (RMD), Arrowhead Pharmaceuticals, Inc. (ARWR), and SolarEdge Technologies, Inc. (SEDG).

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 Teradyne, Inc. (TER), which is a lead semiconductor company that recently released a strong earnings report. 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 Teradyne stock has grabbed our attention year to date (YTD):

  • YTD outperformance vs. market: +82.34% vs. SPDR S&P 500 ETF (SPY
  • YTD outperformance vs. semiconductor industry: +57.64% vs. VanEck Vectors Semiconductor ETF (SMH)
  • Recent big money signals

Just to show you graphically what our unusual trading activity (big money) signals look like, have a look at the top buy signals recently made by Teradyne stock, which has shown a strong chart over the past year. Green bars are showing that Teradyne was likely being bought by an institution according to Mapsignals. It is clear 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 made by Teradyne, Inc. (TER)
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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, Teradyne recently reported strong year-over-year (YoY) numbers:

  • Q3 2019 YoY revenue growth rate: +2.6%
  • Q3 2019 YoY GAAP earnings growth rate: +19%

Next up is Edwards Lifesciences Corporation (EW), which is a top heart-valve maker and producer of other heart-related products. The company 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, with a few for Edwards Lifesciences being:

  • YTD outperformance vs. market: +31.74% vs. SPY 
  • YTD outperformance vs. health care sector: +45.97% vs. Health Care Select Sector SPDR Fund (XLV)
  • Recent big money signals

Below are the top buy signals Edwards Lifesciences stock has made since 2017. Clearly, buying has been strong in 2019:

Chart showing the top-rated buy signals made by Edwards Lifesciences Corporation (EW)
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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, Edwards Lifesciences has solid fundamentals:

  • Three-year sales growth rate: +14.38%
  • Three-year earnings growth rate: +14.79%

Another growth name to consider is ResMed Inc. (RMD), which is a leading health care company with a focus on sleep apnea. 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 ResMed are:

  • YTD outperformance vs. market: +5.99% vs. SPY
  • YTD outperformance vs. health care sector: +20.22% vs. XLV

Below are the big money signals ResMed has made since 2017. We expect buying to resume soon:

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

  • Three-year sales growth rate: +12.34%
  • Three-year earnings growth rate: +5.22%

Number four on the list is Arrowhead Pharmaceuticals, Inc. (ARWR), which is a leading gene-based pharmaceutical firm. The shares have been in bull mode in 2019. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. The bright spots for Arrowhead Pharmaceuticals include:

  • YTD outperformance vs. market: +193.05% vs. SPY
  • YTD outperformance vs. pharmaceutical industry: +210.67% vs. SPDR S&P Pharmaceuticals ETF (XPH)
  • Recent big money signals

Below are the big money signals that Arrowhead Pharmaceuticals stock has made over the past few years:

Chart showing the top-rated buy signals made by Arrowhead Pharmaceuticals, Inc. (ARWR)
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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, Arrowhead Pharmaceuticals has been growing nicely:

  • Three-year sales growth rate: +6,543.11%
  • Three-year earnings growth rate: +14.22%

Our last growth candidate is SolarEdge Technologies, Inc. (SEDG), which is a leading solar semiconductor maker. The company 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 SolarEdge being:

  • YTD outperformance vs. market: +142.82% vs. SPY 
  • YTD outperformance vs. semiconductor sector: +118.12% vs. SMH
  • Recent bullish big money signals

Below are the big money signals SolarEdge has made over the past few years. You can see that this stock has been in a steady uptrend in 2019.

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 grown over the past few years:

  • Three-year sales growth rate: +42.84%
  • Three-year earnings growth rate: +138.98%

The Bottom Line

Teradyne, Edwards Lifesciences, ResMed, Arrowhead Pharmaceuticals, and SolarEdge represent potential buying opportunities 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: At the time of publication, the author holds long positions in Teradyne, Edwards Lifesciences, and ResMed, but no positions in Arrowhead Pharmaceuticals and SolarEdge.