Top 5 Multibagger Stocks Offering Growth, Value and Momentum

Anything that goes up has to come down and vice versa. This rule is so instinctive; we never question it.

We happily stay away from stocks that have gone up a lot.

However, it doesn't work like this in the financial markets. The best performing stocks keep going higher for a short while before they finally reverse.

So, the average best performing stock doesn't come down right away. It keeps going up and remains the best performing stock for some more time. Short term past winners tend to be short term future winners as well.

This is basically momentum investing in a nutshell...it involves taking advantage of market trends and sentiment.

As things are now, there is a change in market sentiments and the overall mood in the markets is once again looking up.

Keeping that in mind, let's look at stocks trading near their 52-week high and riding high on the momentum trend.

Remember that 2024 is a crucial year for India as the election season is approaching fast. So the general sentiment should be positive as the government won't let anything go bad before the general elections, right?

#1 Mazagon Dock

First on this list is Mazagon Dock Shipbuilders.

A leading shipbuilding yard in India with a history dating back to 1774, the company is a premium warship building yard in India that consistently produces warships for the Navy and Bombay High offshore structures.

The company has built a total of 802 vessels, including 28 warships and seven submarines.

The company is on a meteoric growth trajectory, with its shares gaining over 950% in 3 years, thanks to its core business in the defence sector focusing on domestic production and self-sufficiency.

In the past one year, share price of Mazagon Dock has gone up by 181%. Since listing in 2020, the stock is up over 1,000%!

India currently has 28 shipyards. But they contribute only 1.3% of the global vessel fleet, one-eight of China's share.

Despite having a vast coastline of 7,516 kilometres (km), India has had limited shipbuilding capabilities.

Of the six government-owned shipyards (Mazagon Dock, Cochin Shipyard, Garden Reach Shipbuilders and Engineers, Goa Shipyard, Hindustan Shipyard and Hooghly Cochin Shipyard), Mazagon Dock is the only one to be entrusted to build and repair warships (frigates and destroyers) and submarines.

The company received orders worth Rs 60 bn in the current financial year. It also has a higher order book, almost 1.7 times that of its closest competitor Cochin Shipyard. This is primarily because the company has a monopoly in building and repairing submarines and destroyers.

What's more, the company has penetrated a new segment of manufacturing cargo containers by bagging orders of 2,500 containers from Container Corporation of India.

Apart from this, Mazagon Dock has also entered into multiple agreements with private businesses. These agreements aim to boost defence exports from US$ 1.5 bn to US$ 5 bn by the end of the financial year 2024-25.

With multiple tailwinds in favour, there's a good chance that the defence stock might continue the current momentum.

#2 Voltamp Transformers

Next on this list is Voltamp Transformers.

The company is a significant manufacturer of oil-filled power and distribution transformers.

The comprehensive product portfolio is a direct result of the company's technical collaborations with a myriad of pioneers in the world.

It boasts a well-diversified customer base of over 1,000 customers across various end-use industries such as power, oil refineries, textile, chemical, real estate, automobile, infrastructure, and steel.

Shares of the company have seen a meteoric rise in recent months, soon after investors considered the big underlying opportunity in the transformer market.

Investors have started to realise and co-relate transformers to power needs and the sentiment has turned positive for Voltamp.

In the past one year, Voltamp Transformers share price has surged 255% while in the past five years, it has rallied 750%.

Between 2019-2023, the company's net sales and profit have grown at a CAGR of 16% and 22%, respectively. The return ratios have been strong, with a 5-year average RoCE and RoE of 19.5% and 14.8%, respectively.

Given the energy transition, increased private investment, and government incentives in manufacturing, Voltamp Transformers is well-positioned for substantial growth.

With a strong order book, a robust balance sheet and a positive outlook for profitability, the company is expected to continue the current momentum.

#3 Zomato

Next on this list is Zomato.

If you remember, Zomato share price experienced a rocky start in the stock market following its initial public offering (IPO). Initially, the stock price of Zomato fell, leading to significant criticism from investors who were concerned about the company's profitability and growth prospects.

The skepticism was rooted in the company's high valuation at the time of its IPO and the broader challenges faced by tech and startup companies in the market.

However, over time, Zomato's stock has witnessed a remarkable turnaround. And as things stand now, multiple factors indicate that the positive sentiment is here to stay.

In the past one year, Zomato share price has surged by 257% while since listing, the stock is up 44%.

One of the key factors behind this sharp rebound has been the company's continued growth in its core food delivery business, along with its expansion into new verticals such as grocery and nutraceuticals.

Additionally, Zomato's efforts to improve its operational efficiency and reduce losses have been well-received by the market.

As things are now, Zomato is a big beneficiary of the ongoing IPL tournament. Cricket matches, especially during the IPL season, tend to bring people together for viewing parties, leading to an increase in group food orders.

This spike in demand can significantly boost Zomato's order volumes and revenue during match days.

Even after the IPL 2024, we have another big global event - T20 Cricket World Cup - starting June 2024. This could keep Zomato in steady waters for at least a few quarters.

In the third quarter, Zomato's earnings beat estimates on the back of robust growth in food delivery and hyperpure businesses. Net profit jumped nearly 4x sequentially to Rs 1.4 bn.

Going forward, Zomato plans to focus on expanding footprint in larger cities for Blinkit.

The company said in its concall that it has no plans for dividend payouts or buybacks as it's focusing on building businesses and cash accumulation.

Zomato has a sizeable market share with the top two players (Zomato and Swiggy) dominating the segment. Though Amazon and others have planned to enter this space, it will take some time before they reach the higher level and compete with Zomato and Swiggy.

#4 Sharda Motor

Next on this list is Sharda Motor Industries.

The company is primarily engaged in the manufacturing and assembly of auto components and white goods components.

It has a wide product portfolio consisting of catalytic converters, exhaust systems, suspension systems, sheet metal components, and plastic parts for the automotive and white goods industries.

In the past one year, share price of Sharda Motor has gone up by 143% while in the past 5 years, shares have shot up by 355%.

Sharda Motor has a market share of 30% in exhaust systems and 10% in the suspension systems.

High market share has driven the company's volumes over the years, which is why its revenue has grown at a CAGR of 15.3% in the last five years. The net profit has grown at a CAGR of 15.7% on the back of low costs due to backward integration.

Sharda Motor, being a debt-free company over the years, has enjoyed sufficient headroom as it has enough cashflows to fund its capex projects.

After the government announced new emission norms for off-road vehicles, the demand for the company's products has increased, giving it an opportunity to grow the market share.

As things stand now, the company has embarked on a new journey and it's focusing on multiple things at once to drive growth.

Some of these include -

• Lower-cost battery prototypes for EVs
• Niche product development of canopies for specific models
• Another opportunity in the 3 to 4-liter engine segment
• Export focus on Western Europe for opportunities in off-highway segments

All these efforts are expected to keep the company in focus this year.

#5 BLS International

Last on this list is BLS International.

Part of the four-decade-old BLS Group, BLS International has a global presence and provides a diversified range of services.

It's one of the biggest global players in visa application outsourcing.

The company operates as a specialist provider for outsourcing visa, passport, and attestation services. It serves diplomatic missions by managing all administrative and non-judgmental tasks related to the entire life cycle of a visa application process.

In the past one year, BLS International share price has surged 89% while its 5-year gains stand at 789%!

Earlier this year, the company through its wholly owned subsidiary, entered into an into a definitive agreement to acquire 100% stake in iData Danismanlik Ve Hizmet Dis Ticaret Anonim Sirketi ("iDATA") and its wholly owned subsidiaries for Rs 4.5 bn.

According to industry experts, this acquisition is expected to have strong operational and financial synergies for the group.

Recently, the company also successfully completed an IPO for its subsidiary BLS E-Services.

Going forward, BLS International is expected to fare well, backed by steady growth in tourism industry and improved penetration in digital business through on-boarding of new customers.

To know more, check out BLS International's financial factsheet and its latest quarterly results.

Which Other Stocks are Trading Close to Their 52-Week High, and Look Set to Breakout?

Apart from the above, below is the list of stocks trading close to their 52-week high:

Please note that these parameters can be changed according to your selection criteria.

This will help you identify and eliminate stocks not meeting your requirements and emphasise those stocks well inside the metrics.

The Key Takeaway

Many investors consider Momentum Investing strategy to be counterintuitive, but it's actually quite simple.

If there are stocks that are outperforming the market, even going up, when the market is falling, then think about how strongly investors believe in them. They are buying these stocks even when they are selling other stocks.

That shows the potential of keeping a close watch on momentum stocks. They can deliver significant outperformance.

Just as value investors invest in value stocks when no one else is interested, momentum investors should start looking for momentum stocks right now when the momentum is just starting to catch up...this way you can find momentum stocks in their upcycle.

Co-head of Research at Equitymaster Rahul Shah has created an investing system based on momentum stocks.

You can read the latest report here where he recently recommended 20 momentum stocks for this election year.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...