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What is a Multibagger Stock?

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.

The term multibagger was introduced into investing by the legendary Peter Lynch in his 1988 best seller, One Up On Wall Street.

Lynch was a baseball fan and he borrowed the idea of a multibagger from baseball where 'bags' or 'bases' that a runner reaches are the measure of the success of a play.

So for example, a ten bagger is a stock which gives returns equal to 10 times the investment. A twenty bagger stock gives a return of 20 times.

Now that you know what are multibagger stocks, how do you invest in a future multibagger stock?

Well, a potential multibagger stock must be small. Sheer size militates against growth.

It must be relatively unknown. Popular growth stocks may keep on growing but too often one has to pay for expected growth too many years in advance.

It must have a unique product that would do an essential job better, cheaper, and/or faster than before, or provide a new service with prospects of great and long-continued sales increases.

It must have a strong, progressive, research-minded management.

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.

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