A year-to-date gain of roughly 67% for shares of Nomad Foods Limited (NOMD) was accompanied by healthy institutional buying along the way. When looking for the strongest candidates for long-term upside, it can be helpful to look where big investors are wagering on upside. Betting on leading stocks with great fundamentals, great technicals and bullish institutional activity can be a great recipe for long-term investors. 

Being that Nomad's stock is handily outperforming the consumer staples sector, the food company makes a strong case for bullish institutional investors. In the view of Macro Analytics for Professionals (MAP), the strongest indicator of positive price momentum is by measuring potential institutional accumulation, which Nomad has shown recently.

Notably, in 2017, MAP has flagged 25 potential institutional buy signals in Nomad shares, which can be an indicator for further upside in the future. We want to bet alongside big investors who have a favorable outlook on the company. In the chart below, Nomad stock shows a clear breakout on high volume.

 

MAP's process focuses on identifying companies with healthy fundamentals accompanied by outsized unusual institutional activity to try and measure potential accumulation/distribution at the single-stock level. By studying these data points, we can hypothesize 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.

Many of the top performing stocks over the years have displayed continual institutional support, telling a narrative of where big firms may see opportunity. A company, like Nomad, that is growing its revenues and earnings may keep institutions holding shares for years to come.

When deciding on the strongest candidates for long-term growth, we consider many technical areas important to success. A few of these factors for Nomad include:

  • Year-to-date outperformance vs. the overall market (+47% vs. S&P 500)
  • YTD outperformance vs. the sector (+56% vs. Consumer Staples Select Sector SPDR ETF (XLP))
  • Recent breakout of a range
  • And most importantly, institutional accumulation signals.

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. The areas you want to consider important for continual institutional support are:

Nomad checks the box on great technicals and fundamentals while holding one of the highest rankings in MAP's scoring process, which may point to further price momentum.

Taking a look at the overall picture of the institutional accumulation/distribution activity that we monitor for the broad market, signs recently show accumulation signals leading the charge. With the market making new highs into the new year, we want to bet alongside strong stocks that we believe institutions are buying.

We believe that Nomad supports a great technical and fundamental picture for stock appreciation in the years to come, and the stock could remain attractive to keep institutional investors invested. Nomad's stock has slowly been powering higher all year accompanied by potential institutional accumulation, and we believe that the stock has plenty more room to the upside going forward.

The Bottom Line

Nomad Foods stock represents a potential buying opportunity for the long-term investor. Given this year's high number of institutional accumulation signals and the stock's year-to-date outperformance vs. the market, this company may continue to reward shareholders.

To learn more about MAP's institutional signals, please visit http://mapsignals.com/about-us.html.

Disclosure: The author holds no position in NOMD at the time of publication.

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