Multibagger stocks are those that provide returns that are greater than their cost. Prices of such Multibagger Stocks India continue to multiply, increasing in value two, three, and even 10 times. Identifying potential midcaps/large caps equities from current small caps stocks is the technique of spotting multi-baggers.
They are
stocks that evolve gradually; they will not provide rapid rewards if you invest
in them. A fundamentally sound small-cap firm with good management and a
long-term strategy will eventually become a multi-bagger. Investors looking to
build capital with decent risk appetite aim to get their hands on multibaggers.
The idea of a
multibagger is thought to have started with Peter Lynch, who referred
to "10-baggers" in his seminal investing book, One Up on Wall Street.
The term stems from baseball, in which players rack up "bags" by
running around the bases.
How to
identify them?
Future growth
potential:
One should
have a sound knowledge of the products that the company is manufacturing along
with its demand, going further, as well as the economic aspects of the industry
and the country as a whole. An investor should invest in a stock, which has
high growth prospects.
High margin
business and healthy profitability growth:
Look for
businesses, which enjoy higher profitability margins as well as higher entry
barriers. Apart from this, one should also check the financial track record of
the company to check if it’s growing at a faster pace than the industry.
Competitive
advantage:
It’s perhaps
one of the best ways to identify multibagger stocks. A company can stay in the
competition by offering better services & products as it grows. For this,
it is necessary that the products are unique and better than its
competitors.
Strong and capable management:
A business
cannot succeed without a management team that is capable as well as strong.
Looking at multiple aspects like governance practices, board independence,
diversion of funds to other businesses or for personal interest, pledging of
shares, discipline with obligations, and financial matters, etc. will help you
determine the strength of the management team.
Remain
patient:
Last but not
the least, the stock market is a game of patience; never lose it! A
multi-bagger stock sometimes may take some time to take off. Be confident in
your idea & research, and let time do the rest for you.
1) Finolex
Industries Ltd
Current Market
Price – Rs.226/- Target - Rs.
470/-
2) Sumitomo
Chemical India Ltd
Current Market
Price – Rs.375/- Target - Rs. 660/-
3) Tata Elxsi Ltd
Current Market
Price – Rs.5,809/- Target - Rs. 9850/-
4) Affle India
Ltd
Current Market
Price – Rs.1,043/- Target - Rs. 1980/-
5) Indian Energy
Exchange Ltd
Current Market
Price – Rs.700/- Target - Rs. 1480/-
Overall,
investing is all about focusing on your financial goals and ignoring the busy body
nature of the markets and the media that covers them. That means buying and
holding for the long haul, regardless of any news that might move you to try
and time the market.
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