Multibagger Stock is less in demand but everyone is finding it to become get rich quick. Multibagger stock is a company that having fastest growth among other peers.
Multibagger company is a stock that rises fast and give high returns to shareholders. Some people is investing in large cap stocks and think they become multibagger in coming years, that is totally wrong.
Large cap stock have less growth because they capture big market that’s why they grow at very slow rate. On the other hand mid cap stock is good they are growing company but they can’t give you 10x returns in one years.
On the other hand small cap and micro cap give multibagger returns but people forget to buy small and micro cap and they buy penny stocks.
Penny stocks are those stock that lost everything, stock trading at 2-3 rupees levels but people think they become multibagger. Some times it will but according to probability 90% people loss money in peeny stocks.
Penny stock bankrupt due to heavy loan and poor management skills, they first grow then suddenly started making losses and then bankrupt.
Multibagger Stock Indentification Formula
First of all you need to find stock market cap below 1000 Crores. Why below 1000 Crores ? Because if company have 5000 crores of market value then it will difficult to double its revenue that’s why small is best.
Second you need to find growing sector or buzzing sector in future. In simple words what is future of world which company is run most in future. For example Artificial Intilligence is future of IT industry so if you invest now in IT stocks which is specialise in AI then your chances are very high you will get multibagger stocks.
Understand Management behaviour, skills, aspiration,etc for company growth. If management doesn’t become billionaire then you can’t become millionaire. First management need to believe on business and must go thorough 2 complete bull and bear run cycles.
Net revenue was growing on year on year basis. If revenue not growing yoy basis then company will go in loss and was in cash trouble.
Price to earning ratio should be less than industry average and its last 5 years also. When company was good at fundamentals and valuation also low then chances are very high that stock become multibagger.
Investing in small cap stocks is high rewarding but also risky so invest only those money that you will loss and without any tension you can sleep at night.