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The stock market has suffered multiple distribution days during the past couple of months, and it appears a downtrend is ready to begin. Despite this recent market weakness, stocks with strong growth in EPS and sales have held up relatively well to the overall market.

If the SP 500, Nasdaq, and Russell 2000 can shake off the recent heavy volume selling, and begin to tackle those recent 2012 highs, the stocks with the best fundamentals will outperform the overall market.

I want to take a look at four high quality growth stocks with superior fundamentals that are nearing a breakout to a new 52-week high. This high water mark is significant, because 130 years of stock market history tell us that stocks making new 52-week highs go higher and outperform other stocks in the general market that are not hitting this mark.

All of the fundamentals below are from my premium data provider MarketSmith.

First, let's look at Informatica Corporation (INFA). Informatica Corporation is a Redwood City, CA provider of enterprise data integration software and services for various industries.

Informatica Corporation's EPS has grown 17%, 32%, 27%, 26%, 33%, 32%, 21%, and 21% the past eight quarters. Fueling the EPS growth has been sales. Sales have grown 24%, 33%, 31%, 31%, 24%, 24%, 21%, and 15% the past eight quarters. This growth does not appear to be stopping, with annual EPS estimates for 2012 and 2013 coming in at 13% and 17% respectively.

Informatica Corporation currently has 0% debt to shareholder equity, a cash flow of $1.55 per share, a return on equity of 20%, an EPS growth rate of 17%, and spends 16.9% of sales on R&D. The P/E ratio is in the high end of its 5-year range of 14-47 at a current 37. Savvy investors, however, know that making an investment decision using the P/E ratio is foolish, based on historical evidence.

Informatica Corporation mutual fund ownership has increased from 543 to 639 funds during the past eight quarters. While the growth has been volatile during those past eight months it still is growing. Management still owns 6% of the shares outstanding. Any ownership is better than zero ownership.

Currently, Informatica Corporation is working on the right side of a very long double-bottom with handle pattern (July 2011-current). If Informatica Corporation can continue to consolidate for a couple of more weeks and then break out above the recent April highs, I will look to initiate a new long position.

Next up, let's take a look at another California company that is a target of short sellers. Salesforce.com Inc. (CRM) is a San Francisco, CA provider of on-demand customer relationship management software applications and services to businesses worldwide.

Salesforce.com Inc. EPS has grown 7%, 0%, 14%, 3%, -7%, 6%, and 39% the past eight quarters. Sales have been more impressive growing 24%, 25%, 30%, 29%, 34%, 38%, 36%, and 38% the past eight quarters. This growth is expected to speed up with 2013 and 1014 annual EPS estimates for gains of 15% and 29% respectively.

Salesforce.com Inc. only carries 3% debt to shareholder equity, has a cash flow of $2.88 per share, a return on equity of 14%, an EPS growth rate of 111%, and spends 13% of sales on R&D. The P/E ratio is currently at 112 which is in the lower end of its 5-year range of 45-833. The P/E ratio has been a key point to the argument that Salesforce.com Inc. is "too expensive." However, this was the concern of investors back when the stock went public. That has not stopped the stock from gaining 800%+.

The bad news about Salesforce.com Inc is that mutual fund ownership has fallen from 1266 to 1052 funds the past two quarters. Management, however, still owns 10% of the shares outstanding. Clearly, they have a vested interest in making sure Salesforce.com Inc continues to rise.

The move in Salesforce.com Inc from January to April has been too far too fast. The recent breakout on April 11th was on lower volume and comes with price too far extended from the 200 day moving average. It is simply too risky to go long any stock that is so stretched from its 200 day moving average. Salesforce.com Inc will need to spend some time pulling back to the 50 day moving average, allowing the 200 day moving average to catch up to price before it can even be considered as a new long.

Now let's move toward the Midwest with Cerner Corporation (CERN). Cerner Corporation is a developer of medical records, clinical workflow and financial management software applications for healthcare providers.

Cerner Corporation's EPS has gained a solid 23%, 25%, 23%, 16%, 25%, 26%, 26%, and 25% the past eight quarters. Sales are just as consistent, growing 10%, 13%, 13%, 7%, 14%, 15%, 24%, and 23% the past eight quarters. Annual EPS estimates for 2012 and 2013 are for gains of 22% and 19% respectively.

Cerner Corporation has 4% debt to shareholder equity, a cash flow of $3.17 a share, a return on equity of 15%, an EPS growth rate of 22%, and spends 13% of sales on R&D. The current P/E ratio is at the upper end of its 5-year range of 14-43 at a current 40.

Mutual fund ownership has grown from 740 to 849 funds during the past six quarters. While that is impressive it is down from 991 just one quarter ago. Management is still invested in the future holding 15% of the shares outstanding.

Cerner Corporation is another runner that on the short-term has just gone too far too fast. I need to see Cerner Corporation continue to calm down and build a proper base. If it can do this, I will look to buy the next breakout on strong volume.

Finally, we will end it off with the weakest name on the list. Cognizant Technology Solutions (CTSH) is a Teaneck, NJ provider of custom IT consulting, technology, and outsourcing services for companies.

Cognizant Technology Solutions EPS has grown a steady 29%, 18%, 44%, 40%, 34%, 22%, 16%, and 20% during the past eight quarters. Steady is also the name of the game with sales, growing 29%, 42%, 43%, 45%, 43%, 34%, 32%, and 27% the past eight quarters. 2012 and 2013 annual EPS estimates are for gains of 12% and 19% respectively.

Cognizant Technology Solutions has 0% debt to shareholder equity, a cash flow of $3.55 a share, a return on equity of 25%, and an EPS growth rate of 27%. The P/E ratio is currently near the high end of its 5-year range of 9-38 at a current 25.

Like a few of the stocks in this list, Cognizant Tech Solutions is seeing recent mutual fund ownership decline. Mutual fund ownership has fallen from 1563 to 1269 funds the past two quarters. This, on top of management only owning 1%, is not a very strong vote of confidence. However, these numbers are not the numbers that are important. The important numbers are price and volume.

When I started to pen this article on Thursday, everything seemed fine with Cognizant Technology Solutions. Following Friday's close, that is no longer the case. Cognizant Technology Solutions gapped down on very heavy trading and now appears to be putting in a double top, with last April being the previous top. I no longer have any interest in this stock until it can create a whole new properly formed base. As of now, it is a short. This breakdown on Friday is what we call a late-stage-base failure.

The best stocks in the stock market that produce monster gains always sport growing fundamentals. However, growing fundamentals never guarantee a rising stock price. For that, you need institutional sponsorship to help move stocks higher. As long as these stocks are moving higher, I am willing to play. However, if the market continues to produce distribution days, and these stocks lose their 50 day moving averages, I will gladly turn my back to them all and wait for them to set up in historically sound chart patterns.

One final note. If I do purchase shares of these stocks and they do not produce gains immediately, I will cut my losses and move on. These stocks are already established leaders. They are not brand new issues with bright futures that I can recommend for long-term investments. These are intermediate-term investments at best. A lot of growth has already been priced in.

Cutting your losses fast in the stock market is the only way you can guarantee yourself long-term success in such a dangerous investing environment.

Source: 4 Leading Stocks Ready For New Highs