Picking growth stocks with solid buying interest from savvy mutual fund managers is always a good idea. The financial world views fund managers as "smart money," more knowledgeable than the public when it comes to investing and picking winners.
That is why the CAN SLIM investment approach gives special importance to the "I," which stands for institutional investors.
So how do you find these growth stocks? The answer is to scan for stocks that funds are buying in the IBD Stock Screener.
Parker Hannifin is in a buy zone above a buy point of 340.10. Shares broke out of a long consolidation in strong volume last month and have surged 20% so far in 2023.
The stock has a perfect 99 Composite Rating and impressive 92 Relative Strength Rating. The adequate 88 EPS Rating reflects healthy earnings and sales growth over seven quarters.
Sales for the Cleveland company grew 22% to $4.6 billion in the fourth quarter while earnings rose 7% year over year to $4.76 per share.
Parker sells motion and control technologies and systems to mobile, industrial and aerospace companies. It ranks first in the machinery and general industrial group, which holds a lofty No. 20 spot among IBD's 197 industry groups.
Mutual funds own 49% of the stock and fund ownership has been growing over the past six quarters.
Growth Stocks: Rural Lifestyle Retailer
Growth stocks like Tractor Supply are hard to find. It also is in a buy zone after breaking out a cup-with-handle base at 229.91.
The stock has impressive 96 Composite and 88 Relative Strength Ratings.
The Brentwood, Tenn.-based company has a 96 EPS Rating, built on a stellar record of earnings growth over the past seven quarters. According to IBD MarketSmith, sales grew 21% to $4 billion in the fourth quarter while earnings grew 26% year over year to $2.43 per share.
TSCO stock ranks second in the retail and wholesale building products group, which ranks No. 79 among IBD's 197 industry group. The company is a "rural lifestyle retailer," providing livestock and small animal products used in health care, as well as truck, garden, agricultural and tool products.
Mutual funds own 47% of TSCO stock.
Financial Giant In Buy Zone
Ameriprise Financial also broke out of a flat base with a buy point of 339.51 but has slid back to its buy point.
The Composite Rating of this growth stock is nearly ideal, at 96, while its Relative Strength Rating of 89 is also a show of technical strength.
This growth stock has a mixed sales and earnings record, accounting for its EPS Rating of 82. In the fourth quarter, sales declined 4% to $3.6 billion while per-share earnings of $6.94 rose 13%.
AMP ranks No. 3 in the investment banks and brokers group, which ranks No. 38 among 197 industry groups.
Ameriprise provides investment products and services to individuals, institutional clients and mutual funds. Shares have added 10% so far this year.
Mutual funds own 47% of the stock. More funds have been buying the stock over the past six quarters.
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