A multi-bagger stock is a stock that gives multi fold return to the investor in a couple of years. A multi-bagger stock can make you wealthy in a short period of time. However, it is very difficult task to identify multi-bagger stock for the investment. You need to consider multiple factors such as earning potential, line of business, debt level etc. In this post, I will discuss methods to identify multi-bagger stock. In addition to that, I will also share details about 20 Multi-bagger stocks for investment.
How to Identify Multi-bagger stock?
Future Earning potential
You should identify a source of earning for the company. If you find that company has a potential to achieve growth in the business you should buy the stock irrespective of market capitalization. As it could be next multi-bagger stock.
Infosys – Before few years no one was aware that Infosys will be doing exceptionally well in the IT business. If you can identify it at the earlier stage you can take advantage of the same.
In addition to earning potential, you should also check scalability of the operation.
You should check the balance sheet of the company for past few years. The balance sheet of the company reflects the actual performance of the company. Check for profit level and debt level of the company. The profit level of the company should be growing and debt level should be low. It is recommended that debt should be less than 30% of the equity.
Earnings per share (EPS)
Take a look at Earning per share of the company. EPS means total profit in the period divided by the number of shares. It indicates profit allocated to each individual share of the company. It is recommended to buy stock with High EPS. However, EPS is not the only factor in deciding multi-bagger stock.
Past stock performance
One more factor you should consider for the multi-bagger stock is the past stock performance. A stock should be performing consistently well. This will give you a confidence that stock, where you are putting your money, is expected to give good returns in future also.
Quarterly results and Management capability
As an investor, you should also look at quarterly results structural changes in the company, other management decisions, etc. It will also help you in deciding right stock for the investment.
20 Multi-bagger stocks for the Investment
A list of 20 multi-bagger stocks is given below.
Source – Economic Times
All these stocks have generated multifold returns for the investors. If you have invested a small amount of money in these stock 5 years back you could have generated a very good return by now.
Over to you –
What is your take on these stocks?
Do you think these multi-bagger stocks will able to give good returns in the future?
Do share your opinion in the comment section.