Best Growth Stocks for February 2020

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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), Intel Corporation (INTC), Mastercard Incorporated (MA), NVIDIA Corporation (NVDA), and Paycom Software, Inc. (PAYC).

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 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. The following are a few ways in which Garmin stock has grabbed our attention year to date (YTD):

  • YTD outperformance vs. market: +2.91% vs. SPDR S&P 500 ETF Trust (SPY
  • YTD outperformance vs. dividend ETF: +4.5% 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, have a look at all of the top buy signals on the chart below. Garmin has shown a strong chart over the past few years. Green bars are showing that Garmin 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.

www.mapsignals.com

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: +5.91%
  • Three-year earnings growth rate: +16.46%

Next up is Intel Corporation (INTC), which is a top semiconductor company that recently released very strong earnings and guidance. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success, with a few for Intel stock being:

  • YTD outperformance vs. market: +10.9% vs. SPY 
  • YTD outperformance vs. semiconductor ETF: +9.74% vs. VanEck Vectors Semiconductor ETF (SMH)
  • Recent big money signals

Below are the top buy signals Intel stock has made since 2017. Clearly, buying has shown up after earnings, and we believe that the company could be poised for new buy signals.

www.mapsignals.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, Intel has solid fundamentals:

  • Three-year sales growth rate: +6.71%
  • Three-year earnings growth rate: +40.62%

Another growth name to consider is Mastercard Incorporated (MA), which is a leading credit card 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 Mastercard stock are:

  • YTD outperformance vs. market: +5.84% vs. SPY 
  • YTD outperformance vs. technology ETF: +1.66% vs. Technology Select Sector SPDR Fund (XLK)

Below are the big money signals Mastercard stock has made since 2017. Lots of buying has been happening recently.

www.mapsignals.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. Mastercard’s growth rate is impressive. Just look at the past few years:

  • Three-year sales growth rate: +15.69%
  • Three-year earnings growth rate: +20.89%

Number four on the list is NVIDIA Corporation (NVDA), which is a leading semiconductor company. The shares have been in bull mode for years. When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. A few bright spots for NVIDIA stock include:

  • YTD outperformance vs. market: +3.82% vs. SPY 
  • YTD outperformance vs. semiconductor ETF: +2.66% vs. SMH
  • Recent big money signals

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

www.mapsignals.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, NVIDIA has been growing nicely:

  • Three-year sales growth rate: +33.04%
  • Three-year earnings growth rate: +90.54%

Our last growth candidate is Paycom Software, Inc. (PAYC), which is a leading human resources and payroll software company. Paycom 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 Paycom stock being:

  • YTD outperformance vs. market: +18.77% vs. SPY
  • YTD outperformance vs. technology sector: +14.59% vs. XLK
  • Recent bullish big money signals

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

www.mapsignals.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, Paycom has grown over the past few years:

  • Three-year sales growth rate: +36.29%
  • Three-year earnings growth rate: +87.67%

The Bottom Line

Garmin, Intel, Mastercard, NVIDIA, and Paycom stocks represent a potential buying opportunity for the long-term investor. Given the strong historical revenue and earnings growth, along with multiple big money buy signals from unusual trading, these stocks could be worth a spot in a growth-oriented portfolio. 

Disclosure: At the time of publication, the author holds long positions in Garmin and Intel but no positions in Mastercard, NVIDIA, and Paycom.

Source: Investopedia

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