5 Remarkable Signs To Look Before You Select Multibagger Stocks

Posted by Research Ranking on April 22nd, 2019

Stocks that generate several times returns than their costs are called multibagger stocks. Finding multibagger stocks from thousands of stocks may seem little difficult, but need not be daunting if you look at the right indicators. There are multiple ways to identify and pick multibagger stocks to create a winning portfolio.
As Warren Buffett remarkably said “Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”
To find multibagger stocks take a look the below factors:
1. Measure the debt level - One of the best ways to identify a multibagger stock is by looking at companies which have the minimum or zero debt levels. This is one of the key characteristics to consider while looking for high-quality multibagger stocks because high debts on the balance sheet indicate that a significant portion of the profit goes in paying off the interest.
2. Consider business stability and opportunity - Stocks of companies with stable business and good business opportunities can turn multibagger stocks in long-term. Don’t look for market capitalization, rather look at the sustainability of operations and future growth potential of the company.
3. Analyze the Earnings Per Share (EPS) – EPS refers how much earnings the shareholders are getting per share. It is calculated by dividing the net income by number of shares outstanding as on that date of closure of books. The best way to identify potential multibagger stocks is to look at companies which are growing at > 30% of EPS on a yearly basis.
4. Notice the shareholding pattern - Steady stake of promoters in the company is a vital element to examine the soundness of the business as it creates a value proposition from the management’s angle and signifies better times ahead for the business.
5. Keep track of undervalued stocks - Stocks of companies which are undervalued due to ignorance of market, but have great potential to turn into multibagger stocks with time.
There are many research companies in the market who claim to provide multibagger stock tips. As an investor, you too can find multibagger stocks by using the above factors without depending on multibagger stock tips from others.
But remember after investing in multibagger stocks you need to give it time, as no company can double its value overnight. With patience, multibagger stocks can work wonders for your wealth creation.

source: https://researchandranking.weebly.com/blog/5-remarkable-signs-to-look-before-you-select-multibagger-stocks