Multi-bagger stocks are stocks that generate returns more than twice what the original cost of acquisition was. For example, a 5-bagger stock gives a return of 5x the original amount invested, and a 10-bagger gives a return 10x more than the initial investment. Words: 214
According to Ross Cameron of warriortrading.com there are a number of variables to keep in mind when trying to identify these multi-bagger stocks, namely:
- Earnings growth: If a company has posted steady and consistent earnings growth over time, its shares could be your multi-bagger.
- Fundamentals of the company: Keep track of the overall picture of a company’s business and the chances of success in light of the information.
- Efficient management: How well is the company managed? What is the general culture? Do you feel that those at the helm are competent? A visionary management team, outstanding customer service, and first-class execution is what drives the long-term company results and the stock price.
Stocks you think have multi-bagger potential, i.e. stocks issued by companies demonstrating sound management, superb production techniques, excellent research and development skills and tremendous growth potential, are often difficult to find, but you can identify them thorough fundamental analysis.