What are multi-bagger stocks?
Source : multibaggerstocks.co.in
A multi-bagger stock is a kind of equity stock which gives a guaranteed return of more than hundred percent. In other words, stocks that provide with performances several times their costs are called multi-baggers. These are those essential stocks which are often undervalued and possess strong fundamentals, offering themselves as viable and vital investment options. Multibagger stock companies are reliable and efficient in carrying out corporate governance and comprise of flexible businesses scalable within a short period.
The term ‘Multibagger’ first came into existence coined by Peter Lynch in his book published in the year, 1988, titled “One Up on Wall Street.”
This term is very commonly used when discussing high-growth industries, newly emerging markets, etc.
Identification of multi-bagger stocks:
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The level of debt for the concerned company must be well within reasonable limits. There exist no such pre-defined standards set for debt, the reason being it varies from one industry to the other. However, as an absolute measure, liability should never exceed thirty percent of the total equity value.
Source : businessnewsdaily.com
Checking regularly on the previous quarter performance keeps a check on the company’s revenue profit multiples on a quarterly basis. If the multiples turn out to be low with the company still performing at the operational level, it can very well lead to the hint that the company possesses a much significant upside potential.
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Proper sources of earnings in addition to the revenue numbers facilitate adequate and thorough checking of the references with the help of which the company makes money. If the primary revenue segment grows well enough at the macro level and the current operations of the company become easily scalable, then it’s assumed that the stock has a strong potential to be a multi-bagger.
Source : eps.net
Proper calculations of the earnings and price multiples trail along with a twelve month EPS and consequent revenue to arrive at the current PE. If the PE level somehow grows faster than the stock price, then its chances of being a multi-bagger are bright.
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Carrying out specific changes in the business management account helps in looking out for specific significant changes in the quarterly/annual reports that could, in turn, have quite a substantial impact on the company’s operations.
Multibagger Stocks For 2018:
Source : ghanshyamtech.com
The global cues that include signs of the eruption of a trade war between the US and China and signs of faster tightening by the global central banks only add to the woes. The deteriorating macroeconomic factors and detection of frauds in public sector banks dampened investment sentiment.
More than 200 companies, from across the sectors, doubled investor wealth on BSE in the past 12 months. The top multi-baggers of the F.Y. 2018 are stocks from varied industries that include graphite electrodes, carbon black, textile, chemicals, and metals.
In the top players, HEG and Graphite India soared the most at 1,322 percent and 547 percent between April 3, 2017, and March 23, 2018. The shares including Goa Carbon, SORIL Holdings, and Jindal Worldwide were at 618 percent, 498 percent, and 469 percent, respectively.