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Wednesday, May 18, 2011

Multibagger Stocks

The Multibagger stocks are generally small cap stocks (but not a rigid rule, though) which have potential to grow multiple times of their present value in near future.
In 2010 there were many large cap stocks eligible to be called as Multibagger Stocks.
The real challenge is to find a multibagger stock amongst the scores of stock tickers trading on the exchanges.
Apart from analyzing fundamentals, management integrity, future prospects, company growth plans are few factors, instrumental in finalizing multibagger stocks.
First thing one should see while screening stocks is it should not be overvalued that is at or below its fair value.
Revenues should show consistent CAGR growth over a period.
Debt of the company should not be increasing unless there is significant CAPEX or other investment plan and Debt-Equity ratio should be in the comfort range.
Multibagger stocks generally belong to sunrise industries which are supposed to grow in future.
Best example of the aforesaid is M-Commerce (Mobile Commerce) which has got discerning potential prospects.

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