Multibagger Stock
People have many questions in their minds about multibagger Stock or Multibagger companies like Multibagger Stock meaning. Top-quality of Multibagger stocks. What Are Multibagger Stocks? How To identify Multibagger Stocks? How To Pick Multibagger Stocks?
Multibagger stocks meaning
Stocks that give many times the returns of their cost are called multi-baggers. These are essentially stocks that are undervalued and have strong fundamentals. Multibagger stock companies are strong on corporate governance and have businesses that are scalable within a short period of time.
Description: A stock that doubles its price is called a two-bagger, while the price increases by 10 times, it will be called a 10-bagger. Thus, multi-baggers are stocks whose prices have risen several times their initial investment values. These types of shares are not useful to an investor from any treasury.
Multibagger stock companies are strong in corporate governance and do business that can grow rapidly within a short period of time. If the price of a share rises by leaps and bounds, it will be called a multi-bagger. Thus, multi-baggers are stocks whose prices have increased several times over their investment costs.
Multibagger Stocks: Multibagger is a term in the stock market. Multibagger shares are called shares that give multiple times returns to the investors of their investment. However, it is important to identify such shares correctly. According to veteran investor Peter Lynch, investors who are able to correctly identify the multi-bagger and maintain their investment in it for a long time, their wealth grows rapidly in the coming years.
In fact, the stock market is such a place where if you identify the right investment, then you can get many times the returns of your investment in a short time. However, investment here is subject to risk. But if the fundamentals of the stock are strong, then there is not much effect of fluctuations on it.
Below are some examples of Mutibagger Stocks :
Relaxo Footwear Ltd.
- All-time returns: 6193%
- Current Price: Rs 898.15
- Stock gain: Rs 883.34
Avanti Feeds Ltd
- All-time returns: 31679%
- Current Price: Rs 518
- Stock gain: Rs 516
Alkyl Amines Chemical Ltd
- All-time returns: 18698%
- Current Price: Rs 3910
- Stock gain: Rs 3889
Astral Poly Clinic Ltd
- All-time returns: 5671%
- Current Price: Rs 1669
- Stock gain: Rs 1649
Bajaj Finance Ltd
- All-time returns: 93152%
- Current Price: Rs 5362
- Stock gain: Rs 5300
How to choose Multibagger Stocks
If you want to find multibagger stocks, then you can adopt the main points given below:
Along with the growth of the company, you should also pay attention to the management of the company. See how the company is performing compared to its competitor. View the company's debt and default history. Companies that are multi-baggers are different from other companies in their region. Keep an eye on growth and expansion in the company's earnings. See to it that there is not much debt on the company.
How do identify multibagger stocks?
1. The company's debt level must be within reasonable limits
There are no defined levels for debt per se, as this will vary from industry to industry. However, as a ballpark measure, the debt should not exceed 30 percent of the equity value.
2. Check on past quarterly performance
Keep a check on the company's revenue multipliers on a quarter-on-quarter basis. If the multipliers are low but the company is performing at an operational level, this may be an indication that the company has significant upside potential.
3. Choose the right company
Choose a profitable and superior company that has earned at least 20% return on capital to its shareholders.
Ideally, a long-term investment (more than 5 years) allows you to participate in the growth of the company.
In the short term (3 to 6 months) the performance of the stock is driven less by the core philosophy of the company and more by the market value.
4. Sources of Earnings
Along with revenue numbers, check the sources from which the company is making money. is that the primary revenue segment set to grow at the macro level? Is our company operations easily scalable? If yes, your stock may have the potential to be a multibagger stock.
5. Income and Price Multiplier
Calculate the previous 12-month EPS and revenue to arrive at the current PE and price/sales ratio. If the PE level is rising faster than the stock price, the chances of being a multibagger are bright.
6. See Business Model / CapEx / Structural / Management Change
Look for any major changes in quarterly results / annual reports, which can have a significant impact on the operations of the company.
7. Monitoring and review
Monitor and review your investments regularly. You should keep an eye on the announcement of quarterly results of the company. Also, check for the shares taken and write down the corrections in the share prices on your portfolio worksheet at least once a week. This action is more important in volatile times when you can find better opportunities to choose the right price.
Apart from this, you should also check whether the reasons for which you bought the shares earlier are still valid or if there has been a significant change in your earlier estimates and expectations. And you should always monitor the company, there is no red flag in the company.
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