A gain of approximately 80% in 2018 for shares of Match Group, Inc. (MTCH) likely would not have been possible without increasing institutional demand for the stock. In fact, Match Group is a regular household name for Mapsignals, and I even suggested the stock as a buy opportunity in an article posted a year ago. Since I wrote that article on Sept. 8, 2017, Match Group shares have gained 162%. The thing that attracted me to Match Group then is occurring now ... unusual trading activity.
It's no surprise that online match-making has been growing at a fast rate globally. The online dating market is being dominated by Match, but even with a terrific fundamental picture (I'll go over this later), the true tell on the near-term trajectory of the stock lies in the trading activity. At many points in 2018, Match Group shares have increased in price alongside an increase in volume. This can be indicative of smart money accumulating shares. 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. (See also: The Math Behind Online Dating.)
For Mapsignals, the strongest indicator of positive price momentum is obtained by measuring potential institutional buying in the shares. In 2018, Match Group has logged 16 of these rare signals (see chart). We like to see continual bullish activity in the shares alongside solid forward fundamentals, as this indicates that demand for the stock should increase over time.
In the chart below, Match Group stock broke out to new 52-week highs recently. Shares have a lot of momentum and should continue the upward trajectory:
Mapsignals' goal is to identify tomorrow's top stocks today. We're basically looking for outlier companies with healthy fundamentals accompanied by outsized, unusual institutional trading activity. By studying these data points, we can make an educated guess as to which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest-quality stocks.
When deciding on the strongest candidate for long-term growth, we consider many technical areas important to success. A few of these for Match Group are as follows:
Just to give you an idea of what our unusual trading activity signal looks like, have a look at all of the UI signals made by Match Group stock over the past year:
Now, we take it a step further and score the best stocks showing this activity. Below, you can see the historical times that Match Group made buy signals for Mapsignals. These are the highest-rated signals in our stock universe:
On top of a great technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Match Group has solid revenue and EPS growth rates:
- Q2 year-over-year (YoY) revenue growth rate: +36%
- Q2 YoY EPS growth rate: +150%
- Q2 YoY average revenue per user (ARPU) growth rate: +8%
Match Group checks the box on strong technicals and fundamentals while showing bullish institutional momentum in 2018. We believe that the current level for the shares is in position for further upside. All of this points to further long-term bullish action for the stock.
The Bottom Line
Match Group represents a potential buying opportunity for the long-term investor. Given the solid revenue growth, earnings growth and multiple unusual accumulation signals, this stock 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 no position in Match Group shares at the time of publication.