Finding Leading Stocks

Great Fundamentals Can Still Be a Horrible Buy

APP is a perfect example of why growth-stock investors need both fundamentals and price action.

The company’s numbers look exceptional:

• Quarterly EPS growth: +66%

• Quarterly sales growth: +53%

• Pretax margin: 78%

• ROE: 204%

These are exactly the types of fundamentals I look for.

But great fundamentals alone do not make a stock a great buy.

APP currently has a declining 50-day and 200-day moving average, an RS Rating of 8, and a price chart characterized by lower highs and lower lows. That is the complete opposite of the price action growth-stock and momentum traders should be looking for.

APP had several great tradable runs throughout 2023, 2024, and 2025. During those advances, price was above the 50-day and 200-day moving averages, with both moving averages trending higher.

The fundamentals were being confirmed by the price action.

That confirmation does not exist today.

I’m not saying APP cannot eventually have another strong run. But in its current technical condition, it is not a stock I would want to own. The last time its chart looked this weak was in 2022.

This is why I require both:

Strong fundamentals identify the companies with potential.

Strong price action confirms when the market agrees.

A great company can still be a horrible stock to buy at the wrong time.

Every Market Cycle Has a “Big Stock.” But the Real Clue Is Usually the Industry Group Behind It.

The market’s biggest winners rarely emerge alone. They are usually part of an industry group benefiting from a powerful new fundamental trend.

2023: AI Compute and Semiconductors

This marked the beginning of a new bull market and the emergence of the generative AI theme.

Big leaders:

• $NVDA | Nvidia

• $SMCI | Super Micro Computer

NVDA became the face of the cycle, but the leadership was much broader. Chips, servers, networking equipment, and the entire data-center buildout were beginning to move.

2024: AI Software, Data Platforms, and Power

Leadership expanded from companies building the AI infrastructure to those finding ways to monetize and support it.

Big leaders:

• $PLTR | Palantir

• $APP | AppLovin

AI adoption spread into software, data platforms, advertising optimization, networking, and power generation. The theme was evolving, but the underlying driver remained the same.

2025: Memory, Storage, and the AI Data Stack

The market’s attention shifted toward the next major bottleneck. AI systems required enormous amounts of high-performance memory, flash storage, and data-center capacity.

Big leaders:

• $SNDK | SanDisk

• $WDC | Western Digital

• $STX | Seagate Technology

• $MU | Micron Technology

These became some of the market’s biggest winners as demand for AI memory and storage accelerated.

2026: The Memory Supercycle Continues

Leadership continued into 2026 and semiconductors remerged as a leading group rather than transitioning into an entirely new theme.

Leaders:

• $SNDK | SanDisk

• $MU | Micron Technology

• $STX | Seagate Technology

• $WDC | Western Digital

But don’t overlook what happened outside the dominant AI theme.

Metals and mining also developed into a major winning group during this bull market period 2024-2026. The market can have one dominant secular story while still producing powerful leadership in completely different areas.

The next monster winner probably won’t be random.

It will likely emerge from a strengthening industry group with accelerating earnings and sales, increasing institutional sponsorship, elite Relative Strength, and a chart that refuses to break.

2023: AI compute and semiconductors

2024: AI software, data platforms, and power

2025–2026: AI memory, storage, semis

Meanwhile, metals and mining proved that major leadership can still emerge outside the market’s primary theme.

What industry group do you think becomes the next true market leader for 2026–2027?