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Nvidia, Microsoft Reveal 7 Telltale Traits Of Top Stocks

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Finding the best growth stocks to buy is no easy task. But you can streamline your search by following a simple buying checklist. And regularly checking IBD’s stock screens can help you put the best potential stock picks on your list of stocks to watch.




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This will help you identify and track leading growth stocks such as Nvidia (NVDA), Apple (AAPL) and Microsoft (MSFT). In strong markets, household names like Facebook parent Meta Platforms (FB) (formerly known as Facebook), Amazon.com (AMZNNetflix (NFLX), and Google parent Alphabet (GOOGL) also make an appearance.

NVDA stock soared to a new high in last July before pulling back to form a cup with handle. Nvidia formed and broke out of another chart pattern in October, and soared to new heights after beating estimates again on Nov. 17. In a sign of clear stock market leadership, its relative strength line soared. Nvidia has since pulled back below its 10-week moving average.

On Nov. 17, NFLX stock reached a new all-time high following a breakout in September. But Netflix crashed below its 10-week line the week of Dec. 3, leading to a severe decline. It’s a reminder of how successful investing isn’t just about picking stocks. Having sell rules and a risk-management strategy is essential.

GOOGL stock has also made multiple IBD stock lists over the years, offering multiple buying opportunities. But it, too, has recently come under pressure. Alphabet, however, has shown far more resilience than Netflix. GOOGL stock is now trying to hold its 40-week moving average and retake its 10-week line.

After breaking out in early July of 2021, AMZN stock fell below its 10-week moving average. Like Netflix, Amazon’s recent action reinforces the need to take sell signals into account after making new stock picks.

These stock screens also help you zero in on IBD Long-Term Leaders, like Alphabet and MSFT stock.

You’ll also discover newer IPO stocks to watch like Datadog (DDOG), Endeavor Group (EDR) and Zim Integrated Shipping Services (ZIM). You’ll find these and more IPOs on the IPO Leaders screen.

Find The Best Stocks To Buy And Watch

The company names will change over time and across fluid stock market cycles. But the traits of winning stocks you look for remain the same.

Here’s an effective way to hone your stock picks and zero in on the best stocks to buy and watch. Focus on stocks with exceptional earnings growth that are breaking out of a chart pattern during a strong market uptrend.

For beginning investors unsure of how to start investing in stocks (or for experienced investors looking to save time), start with this simple three-step routine.

Maintaining your list of stocks to buy and watch is an ongoing process. Regularly use lists like IBD Long-Term Leaders, Sector Leaders, IBD 50, IBD Big Cap 20 and IPO Leaders to continually find potential stock picks.

Be sure to also have sound rules for when to sell stocks since even the best stocks eventually falter, especially when the general market comes under pressure. Last year’s coronavirus stock market crash and rebound only reinforced that reality.


Find The Best Growth Stocks With The IBD Stock Screener


Stock Picks: Growth Stocks — Focus On Big EPS Growth

Through a groundbreaking study of 100-plus years of market history, IBD identified seven common traits of winning stocks, with earnings growth being one of the most critical factors.

During their big moves, top performers like GOOGL, NVDA, AMZN and NFLX have all shown explosive, even triple-digit, earnings growth as their share prices rose dramatically. New IPO stocks to watch, such as Endeavor, Datadog and ZIM stock, have also shown many of these key stock-picking traits.

So as you go through a buying checklist to evaluate your potential stock picks, look for companies posting 25% or higher earnings growth.

Be sure to also use IBD Stock Checkup to check your stock’s EPS Rating and many other key stock-picking metrics. You’ll instantly see if the stock earns a pass or fail grade for both its quarterly and annual earnings growth.

Tips On Evaluating Earnings Growth

Stock Picks: Look For Growth Stocks Forming Chart Patterns

Just because a company has stellar earnings growth doesn’t mean it’s a good time to buy its stock. Several other factors come into play, including the market trend and the chart action. You can significantly improve the performance of your stock picks — and reduce your risk — if you make sure the stock chart and the market are giving you the green light to buy.

Chart patterns serve as a launchpad for a stock’s new climb. Also known as bases or consolidations, these patterns form after a stock has already climbed and is now taking a breather to hopefully set up a new run. The ideal time to buy a stock is when it completes that base and proves its strength by punching through a point of resistance in heavy volume.

The most profitable and common chart patterns to look for are the cup with handle, double bottom and flat base. Once you identify companies with strong earnings that are also forming one of these three patterns, you’ll be well on your way to finding the best stocks to buy and watch.

Winning moves from FB, AAPL, AMZN, NFLX, GOOGL, NVDA stock and countless others over the years prove this point. Virtually all of the market’s biggest winners form one or all three of these patterns as they make their big climbs.

These chart patterns repeat again and again, year after year.

As a historical example, see the chart below for how Nvidia stock launched what became a 750% gain beginning in 2016. In 2018, Nvidia then corrected sharply, as even the best growth stocks eventually do. That episode is a good reminder of why investors also need to follow proved sell rules.

Then look at an NVDA stock chart now. Nvidia strongly rebounded from that correction to hit more new highs before starting to pull back in November of last year.

Tips On How To Read Stock Charts

Stock Picks: Where To Find The Best Stocks To Buy And Watch

To help streamline your research, IBD provides a collection of time-tested stock lists. These screens are computer-generated, based on proven criteria rather than opinions.

The criteria comes from our extensive study of over 100 years of market history in which we identified the common characteristics winning stocks share in the early stages of a big move. With these screens, we highlight today’s stocks that are most strongly showing those same telltale traits.

While you should never buy a stock just because it’s on one of IBD’s screens, these lists are an excellent starting point for building a high-quality, actionable watchlist.

Be sure to regularly check IBD Stock Lists Update to see which companies just came on and off IBD’s top screens.

Tips On Where To Find The Best Stocks

Tips On Finding The Best Stocks To Buy And More

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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