What Stocks to Buy: Finding the Next Leading Growth Stock

Finding the best stocks to buy: what top traders look for

Trying to find the best stocks to buy can feel like searching for a needle in a haystack. With thousands of companies in the market, each with its own chart patterns, earnings reports, and business story, it’s easy to feel overwhelmed.

So, how do top traders cut through the noise and pinpoint high-potential opportunities?

They focus on four key traits: strong earnings growth, bullish chart patterns, high liquidity, and institutional buying. When all of these align, the stock has a much higher chance of becoming a big winner.

These are the stocks that stand out. They combine solid financials with visible momentum and attract quiet accumulation from big-money players like hedge funds and mutual funds.

When you stack technical strength on top of strong fundamentals, you’re not just hoping for gains – you’re giving yourself a real edge. That’s how experienced traders spot winners early and stay ahead of the crowd.

These standout stocks have solid financials, show strong upward momentum on charts, and quietly attract large institutional investors. When fundamentals and technicals line up, your odds of catching a big move early go way up.

How institutional investors reveal strong stocks to buy

Institutional investors like hedge funds, mutual funds, and pension funds manage billions of dollars and have the power to move markets.

Because of the size of their trades, institutions can’t load up in a single day. Instead, they look for stocks to buy gradually, often over weeks or even months. This slow, steady accumulation creates persistent buying pressure that can quietly push prices higher, even before the stock hits the radar of retail investors.

These firms have a serious edge. They employ teams of analysts, use advanced tools, and access proprietary data that most individual investors can’t. So when institutions buy a stock, it’s rarely a guess – it’s a calculated move backed by research.

That’s why spotting signs of institutional accumulation is so valuable. You’re essentially catching a ride on the same wave that big money is creating.

Signs institutions are buying:

• Rising volume on up days
• Tight price action near key levels
• Repeated support near moving averages
• Breakouts from bases on strong volume

If you can spot these clues early, you’ll often find yourself ahead of the crowd and positioned for powerful moves as more buyers pile in.

Why earnings and sales growth matter when picking stocks to buy

Strong fundamentals are the foundation of every winning stock. If a company isn’t growing, there’s little reason to expect its stock price to rise in any meaningful way. That’s why top traders always start with the basics: earnings and sales growth.

When a company consistently reports higher earnings and stronger sales, it’s a clear sign the business is expanding and creating real value for shareholders.

Earnings growth is a key signal

Earnings per share (EPS) tells you how much profit the company is making on a per-share basis. It’s one of the most direct reflections of profitability and it’s something big investors watch closely.

Look for EPS growth of at least 30%, both quarter-over-quarter and year-over-year. That kind of consistent, rapid growth sends a strong message: this company isn’t just doing well, it’s accelerating.

Accelerating earnings often attract institutional investors, who see it as a signal of efficient operations, high demand, and long-term potential. And when big money starts buying, stock prices usually follow.

What sales growth says about a company’s future

While earnings show profit, sales growth tells you the total revenue generated from the sales of goods and services. If customers are lining up, that’s a powerful vote of confidence in the business.

Aim for at least 25% year-over-year sales growth. It shows that demand is strong and likely growing. When paired with rising earnings, it often means the company is scaling successfully.

Strong sales growth tends to lead to future earnings growth. It’s the fuel that powers long-term uptrends.

Consistent growth matters

The best stocks to buy don’t just have one good quarter -they deliver over and over. You want to see quarterly growth stacking up over time. One-off spikes can be driven by unusual events or short-term trends, but sustainable growth tells a deeper story.

So when you’re narrowing down your watchlist, start with the fundamentals. If a stock is showing strong earnings and sales growth quarter after quarter, there’s a good chance you’re looking at a real contender.

Liquidity matters: top stocks to buy have strong trading volume

One of the most essential factors when picking stocks to buy is liquidity. If you can’t get in or out of a position quickly and efficiently, even the best setup can fall apart.

Liquidity refers to how easily shares can be bought or sold without causing big price swings. For traders and institutions alike, it’s a non-negotiable factor.

Make dollar volume your go-to liquidity metric

To measure liquidity, focus on dollar volume, which is calculated by multiplying the stock’s share price by its average daily trading volume.

Aim for stocks with at least $10–20 million in average daily dollar volume. That’s the threshold where larger investors can step in without disrupting the price too much.

When a stock meets or exceeds this level, it usually means:

• There’s active interest from serious buyers.
• You can enter or exit positions smoothly, even with a large size.
• Institutions can accumulate shares over time without tipping their hand.

Why low-liquidity stocks are often dead ends

Illiquid stocks may look promising, but if institutions can’t buy in bulk, they usually stay away. That means less buying pressure to support your trade.

Even a picture-perfect breakout can fail if no one’s around to support it.

If you’re scanning for stocks to buy and the volume is thin, skip it. No matter how good it looks technically, if there’s not enough dollar volume to support institutional interest, the risk of failed follow-through is too high.

Chart patterns and price trends help you time the right stocks to buy

Even if a stock has strong fundamentals, buying at the wrong time can wreck your returns. That’s where technical analysis comes in.

Charts don’t just show you where a stock has been, they help you see when it’s visiting a potential support or resistance areas.

Basing patterns reveal big opportunities

Before a major move, the best stocks to buy often form basing patterns. These are periods of consolidation where the stock trades sideways and quietly builds strength. During these phases, institutions may be accumulating shares without pushing the price up too quickly.

Watch for these classic bases:

• Cup with handle
• Flat base
• Double bottom

When a stock breaks out of one of these patterns on above-average volume, it’s usually a strong signal that demand is ramping up and a new uptrend is beginning.

Moving averages confirm momentum

Two key moving averages that top traders keep on their charts are the 21-day exponential and 50-day simple moving averages. They help you gauge a stock’s short-term and intermediate momentum.

Look for:

• The stock is trading above both moving averages
• The 21-day line above the 50-day line
• Both moving averages are moving higher

That alignment shows the trend is strong and getting stronger. It means buyers are in control, and the stock is gaining steam.

Stack technicals with fundamentals for the strongest setups

When you’ve got a stock with strong fundamentals like accelerating earnings and sales, and it’s forming a bullish pattern, that’s where the magic happens. You’re combining what to buy with when to buy.

The goal is to catch the move as it begins, not after it’s already made headlines.

Use relative strength to find market-leading stocks to buy

Relative Strength (RS) is one of the most powerful tools for identifying market leaders. It compares how a stock is performing relative to the rest of the market, usually benchmarked against the S&P 500.

When a stock outperforms the market over time, especially during corrections or sideways markets, it shows that institutions are likely accumulating shares. These stocks tend to be the best stocks to buy because they’re being supported by heavy demand.

You can track RS visually using an RS line on a chart. When that line is rising, it means the stock is gaining strength compared to the broader market.

If a stock lags while the market is rising, or falls when everything else is flat, it shows a lack of buying interest. That’s not the type of name you want to be involved with, no matter how compelling the story.

When you’re building a list of stocks to buy, prioritize those showing strong relative strength. They’re often the first to rebound after a pullback and tend to lead the next leg higher.

Example: Why Zoom (ZM) was one of the top stocks to buy in 2020

• Earnings & sales exploded as the pandemic drove millions of users to adopt video conferencing.
• Institutions jumped in early, steadily buying shares as Zoom reported quarter after quarter of growth.
• The stock showed strong relative strength compared to the S&P 500 and formed a Volatility Contraction Pattern (VCP) before breaking out.
• It traded with high dollar volume, giving traders and funds the ability to enter with size.

Final thoughts on what stocks to buy

Finding the best stocks to buy isn’t about chasing hype or acting on tips. It’s about doing the work – analyzing earnings and sales growth, spotting institutional interest, scanning for liquidity, studying chart patterns, and tracking relative strength.

When you combine all these factors, you’re not just guessing. You’re building a strategy that helps you catch powerful trends early. That’s how top traders stay ahead of the market, and how you can too.

That means looking for:

• Explosive earnings and sales growth
• Clear, bullish chart patterns that show accumulation
• Strong liquidity so you can trade efficiently
• Institutional footprints that reveal serious interest
• Relative strength that sets leaders apart from the pack

When all of these align, you’re no longer guessing—you’re making informed, high-probability decisions.

Remember: the best stocks to buy don’t just look good on one metric – they fire on all cylinders. They grow, they attract demand, they hold up in tough markets, and they break out with conviction.