Using a few key screeners, you can identify strong growth stocks like Apollo Medical Holdings (NASDAQ: AMEH), Perficient (NASDAQ: PRFT) and National Storage Affiliates Trust (NYSE: NSA).
What do those stocks have in common? They’re all growing in institutional sponsorship, and all have shown accelerating revenue or earnings growth in recent quarters.
Growing earnings and sales attract big institutional investors, like mutual funds, exchange-traded funds, hedge funds, insurance companies, university endowments, banks, and foundations. When those big buyers start piling into a stock, they send the price higher.
However, institutions typically don’t take an entire position all at once. Instead, they scale into a stock. That’s because their buying could send the stock higher than what they are willing to pay at the moment, which would blow their investment strategy out of the water.
Often institutions will step in to buy shares once a stock has corrected after a previous run-up. That’s how they snag the best prices for securities they believe will deliver big returns.
Apollo Medical Holdings has been on a spectacular run, driven by growing fund sponsorship, not Wall Street Bets Redditors.
In fact, it’s gone almost parabolic, as it’s working on its ninth month in a row of double-digit price gains. The stock is up an astonishing 242.78% in the past three months, and 398.69% year-to-date.
The company operates a platform that allows physicians to coordinate care services with patients, hospitals, other physicians, clinics and insurance companies.
Apollo grew earnings from $0.29 per share in 2018 to $1.01 per share in 2020.
Quarterly earnings grew at double-, triple- or even quadruple rates in the past six quarters. The company’s potential attracted a growing number of mutual funds, hedge funds and asset managers.
Shares closed Monday at $91.11, up 6.70%, or $5.72. Obviously, as a glance at the chart shows, this is not a stock to enter at this time, as some profit-taking is inevitable. It’s best to wait for the next pullback.
Perficient has also been on a steady climb since November. The stock is up 75.32% in the past three months and 146.79% year-to-date.
The company offers digital consulting services in the areas of artificial intelligence, analytics, machine learning, business intelligence and custom product portfolios, among other specialties. Its clients are in various industries, including automotive, consumer goods, healthcare, financial services and manufacturing. Last week, Perficient announced the launch of a customer experience and recommendation engine for a digital bra-fitting platform from lingerie brand Wacoal.