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How to Invest in Multibagger Stocks

Multibagger stocks is a term for companies whose share price multiplies in price. Basically, the companies which at least see a 100% jump in their share price over specified period.

They stocks are highly sought after and every investor dreams of owning at least one multibagger stock in his portfolio.

Investing in multibagger stocks is no easy task. You need to research extensively and do your homework. Analysts over the world use their deep research and are constantly on the lookout for companies that can turn out to be future multibaggers.

But did you know there’s an easy way to invest in multibagger stocks?

For investing in multibagger stocks, you need to identify companies which have the below traits:

  • A solid competitive advantage
  • Fast sales growth and a high current or future profitability
  • Companies with low marketcap
  • Low or reducing debt level
  • Growing free cash flow
  • Relatively high promoter holding
  • High and possibly increasing Return on Equity (ROE)

Once this is done, you’ll come across an initial list of stocks out of which you need to further segregate the ones which have the highest growth potential.

An important point you should note here is that your goal should be to look for a good investment and not necessarily a multibagger stock.

Check out Equitymaster’s stock screener for investing in the best multibagger stocks.

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