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 is 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 Big Money trading activity.
Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are FTNT, AMZN, PAYC, TTD, & ZM.
For MAPsignals, we believe the true tell on the near-term trajectory of the stock lies in the trading activity of the stock. The bottom line here is that oftentimes 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 Fortinet, Inc. (FTNT), which is a leading cyber security firm. They have been cruising higher for years.
When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for FTNT being:
1-year performance (+95.86%)
YTD outperformance vs. NASDAQ ETF (+57.56% vs. QQQ)
Historical big money signals
Just to show you what our Big Money signal looks like, have a look at all of the top buy signals FTNT has made the past few years. That’s one strong uptrend. Blue bars are showing that Fortinet was likely being bought by a Big Money player according to MAPsignals.
It’s clear there’s a lot of blue historically with this stock. That’s exactly what you want to see when looking for a great growth name. This is what I call the stairway to heaven:
Source: MAPsignals, End of day data sourced from Tiingo.com
On top of technicals, you need to look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Fortinet’s revenue numbers have been strong:
3-year sales growth rate (+20.17%)
3-year earnings growth rate (+347.93%)
Next up is Amazon, Inc. (AMZN), which offers a leading online marketplace. They are also dominant in cloud computing via AWS.
When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for AMZN being:
1-year performance (+19.82%)
YTD vs. Staples ETF (+.2% vs. XLP)
Historical big money signals
While the stock has outperformed recently, look at the long-term picture. These are the top buy signals Amazon has made since 2015. Clearly the Big Money has been consistent for years:
Source: MAPsignals, End of day data sourced from Tiingo.com
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, Amazon has grown revenues massively:
3-year sales growth rate = +29.67%
3-year earnings growth rate = +107.5%
Another growth name to consider is Paycom Software, Inc. (PAYC), which offers HR and payroll solutions to small businesses.
When we decide on the strongest candidate for long-term growth, we want to see a history of big money buying the shares. Paycom has that. Also, recent underperformance can be attractive:
1-year performance (+32.16%)
YTD underperformance vs. technology ETF (-32% vs. XLK)
Below are the big money signals Paycom has made since 2015. This stock has been a magnet for Big Money:
Source: MAPsignals, End of day data sourced from Tiingo.com
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. Paycom’s growth rate is impressive. I expect more growth in the coming years:
3-year sales growth rate = +25.03%
3-year earnings growth rate = +39.28%
Number 4 on the list is Trade Desk, Inc. (TTD), which is the leader in digital advertising. The shares have been in bull-mode the past couple of years.
When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for Trade Desk being:
1-year performance (+81.03%)
YTD outperformance vs. discretionary ETF (-16.53% vs. XLY)
Historical big money signals
Below are the big money signals that TTD has made since 2017:
Source: MAPsignals, End of day data sourced from Tiingo.com
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, Trade Desk has been growing nicely:
3-year sales growth rate = +39.94%
3-year earnings growth rate = +65.73%
Our last growth candidate is Zoom Video Communications, Inc. (ZM), which is a video communications company.
When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for Zoom Video being:
1-year performance (+47.94%)
YTD underperformance vs. technology sector (-2.66% vs. XLK)
Historical big money signals
Below are the big money signals Zoom Video has made since 2019. You can see how powerful the performance has been since the pandemic hit in March 2020:
Source: MAPsignals, End of day data sourced from Tiingo.com
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, Zoom Video has grown revenues massively over the past few years:
3-year sales growth rate = +177.46%
3-year earnings growth rate = +2441.03%
The Bottom Line
FTNT, AMZN, PAYC, TTD, & ZM represent top growth stocks for August 2021. Given the strong historical revenue & earnings growth, and multiple big money buy signals, these stocks could be worth extra attention.
To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com
Disclosure: the author holds long positions in ZM in managed accounts. He holds no positions in FTNT, AMZN, PAYC & TTD at the time of publication.
For a look at all of today’s economic events, check out our economic calendar.
