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 growth candidates are Garmin Ltd. (GRMN), Facebook, Inc. (FB), Intuitive Surgical, Inc. (ISRG), Teradyne, Inc. (TER), and KLA Corporation (KLAC).

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 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 Garmin Ltd. (GRMN), which is a leading GPS company. Garmin stock 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 positives for Garmin stock include:

  • Six-month outperformance vs. market: +5.02% vs. SPDR S&P 500 ETF Trust (SPY
  • Six-month outperformance vs. dividend ETF: +10.33% vs. iShares Select Dividend ETF (DVY)
  • Recent big money signals

Just to show you graphically what our unusual trading activity (big money) signals look like, the following chart shows all of the top-rated buy signals made by Garmin stock. The company has shown a strong chart over the past few years. Green bars are showing that Garmin 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 top-rated buy signals made by Garmin Ltd. (GRMN)
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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, Garmin's numbers have been strong.

  • Three-year sales growth rate: +7.65%
  • Three-year earnings growth rate: +24.09%

Next up is Facebook, Inc. (FB), which is a top social media company. The company has faced a lot of media scrutiny, but it continues to grow and make a lot of profit. 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: +7.44% vs. SPY 
  • One-year outperformance vs. communications ETF: +5.3% vs. Communication Services Select Sector SPDR Fund (XLC)
  • Recent big money signals

Below are the top-rated buy signals that Facebook stock has made since 2017. Clearly, buying has been consistent for years.

Chart showing the top-rated buy signals made by Facebook, Inc. (FB)
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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, Facebook has solid fundamentals.

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

Another growth name to consider is Intuitive Surgical, Inc. (ISRG), which is a leading robotics 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 Intuitive Surgical stock are:

  • Six-month outperformance vs. market: +3.41% vs. SPY 
  • Six-month outperformance vs. health care ETF: +2.48% vs. Health Care Select Sector SPDR Fund (XLV)

Below are the big money signals that Intuitive Surgical stock has made since 2017. Lots of buying occurred in late 2018, which has marked a strong base level compared to now. If shares fall further, I believe that there could be additional demand for the stock.

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

  • Three-year sales growth rate: +18.34%
  • Three-year earnings growth rate: +26.88%

Number four on the list is Teradyne, Inc. (TER), which is a leading semiconductor company. The shares have been in bull mode over the past year. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. Some bright spots for Teradyne include:

  • Six-month outperformance vs. market: +9.13% vs. SPY 
  • Six-month outperformance vs. mid-cap ETF: +13.28% vs. iShares S&P Mid-Cap 400 Growth ETF (IJK)
  • Recent big money signals

Below are the big money signals that Teradyne has made since 2017.

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

  • Three-year sales growth rate: +9.81%
  • Three-year earnings growth rate: +50.92%

Our last growth candidate is KLA Corporation (KLAC), which is another leading semiconductor company. 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 KLA Corporation being:

  • One-year outperformance vs. market: +17.39% vs. SPY
  • One-year outperformance vs. mid-cap sector: +22.07% vs. Vanguard Mid-Cap Index Fund ETF Shares (VO)
  • Recent bullish big money signals

Below are the big money signals KLA Corporation has made since 2017. You can see that this stock has been in a steady uptrend.

Chart showing the top-rated buy signals made by KLA Corporation (KLAC)
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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, KLA Corporation has grown over the past few years:

  • Three-year sales growth rate: +15.19%
  • Three-year earnings growth rate: +21.49%

The Bottom Line

Shares of Garmin, Facebook, Intuitive Surgical, Teradyne, and KLA Corporation 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 Garmin and Teradyne but no positions in Facebook, Intuitive Surgical, and KLA Corporation.