Multibagger Stocks Below Rs 100 Stocks

As per Equitymaster's Stock Screener, these are the stocks which have given multibagger returns to shareholders -

• #1 PLETHICO PHARMA
• #2 DFM FOODS
• #3 HINDUSTAN AERO.
• #4 VARUN BEVERAGES
• #5 ADANI POWER

These companies have been ranked as per the returns they have delivered to shareholders in the last three years on a compounded annual growth rate (CAGR) basis.

Remember, it's not easy to identify future multibagger stocks, but if you do it carefully and with due diligence, you can find high growth companies which can turn out to become future multibaggers.

While there's no guaranteed method, multibagger stocks have some qualitative rules.

#1 A solid competitive advantage

A company's ability to sustain its market share over time is what matters. A competitive advantage can be anything ranging from brand name and goodwill to patents, etc.

For example, IRCTC currently enjoys a 100% monopoly in its industry. It is an e-ticketing and catering company that has no competitors yet.

#2 Fast sales growth and a high current or future profitability

Consistent growth is certainly an indication the company is doing well and has good prospects. You should understand the business, its future prospects, expansion plans, and industry outlook.

#3 Low or falling debt levels

Multibagger stocks usually have low debt. If a company is highly leveraged and unable to generate profits, it can be a cause of concern for the investor.

#4 Growing free cash flow

Investors love companies that produce plenty of free cash flows. It signals a company's ability to repay debt, pay dividends, buy back stock, and facilitate the growth of business - all important undertakings from an investor's point of view.

#5 High and possibly increasing Return on Equity (ROE)

Equitymaster has a screener which can help you find high growth companies. You can start you search there.

And if you want to get a sense of how big returns could be, see our list of multibagger stocks here...

There isn't any standard thumb rule for when to sell a stock. However, you can follow a few guidelines.

You can sell the stock if the company's fundamentals take a turn for the worse. You could also sell if the stock has achieved the predetermined target price.

Other reasons for selling could be if the business has entered a mature or a declining phase in the growth cycle, and for rebalancing your portfolio.

Fundamentally strong stocks that have a long runway for growth and are trading at reasonable valuations have the potential to become multibaggers in the long run.

Apart from the above, another way to look for future multibaggers is to look into the past. Stocks which have delivered the highest returns in the past might be a good place to begin your search.