3 Ways to Identify – A High Return Multibagger Stock
Multibagger is a stock that has a potential of meteoric growth and can multiply your investment value over a period of time. A Two-bagger is a stock that has doubled in price while a Ten-Bagger is the one which has multiplied its value ten times and hence the name Multibagger.
So the question rises again, why doesn’t everyone invest in Multibaggers? The answer is quite obvious
Finding a Multibagger is like finding a needle in a haystack, but do keep in mind that the needle(s) do exist. It depends on how thoroughly you go about your research.
Start your research; try to look at companies with small market caps as they are more likely to grow exponentially compared to the ones with large market caps. Do your diligence on the background of the promoters and their holdings. Make sure that the company has a lower equity base as it is directly proportional to its valuations and earnings per share (EPS). Also, make sure that the company has a strong balance sheet and belongs to a booming industry. Apart from these, there are lots and lots of factors to be considered before you conclude that the company is a potential Multibagger.
Keep in mind that all Multibaggers go through a tough ride during a crash or some economic slowdown. Sometimes potential Multibaggers including Pantaloons Fashion & Retail, Infosys, Zee entertainment etc have seen a crash up to 50% from their peak. You must have the patience of a saint in order to generate returns from a these stocks.
Remember, there are no shortcuts to finding them. If you are conducting the research by yourself, you will have to go through a comprehensive and a repetitive process which includes both, Technical and Fundamental Methodologies (Valuations and Financials). The stock price and the company’s fundamentals will have to be followed dedicatedly for months or even years to identify if the stock is a multibagger. Also, stock charts will have to be compared with all their peer companies keeping the industry trend into consideration constantly. This is where advisory services like me come into the picture.
Every investor in the world of stock market thinks that she/he will make it big. But what they fail to understand is it takes a lot of patience and a heavy risk appetite to invest in a multibagger. Many have picked out top Multibaggers in the past but did not have the patience to hold them and reap the fruits of their hardwork. Remember, finding those Moneyminters is just half the battle won; riding them till the end will actually make a difference to your wealth!
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