How Can You Find a Multibagger Stock to invest in?

 
The allure of huge profits is one of the main reasons why many novice investors are drawn to the stock market. After all, who wouldn't want to get rich quickly by investing in a stock that multiplies their initial investment by a factor of ten? "10-bagger" was one of the first names used to describe high-growth stocks. This term was invented by famed investor Peter Lynch to describe stocks that have returned 10 times the initial investment.
 

However, when global equity markets continued to rise, we went beyond 10-baggers and are now looking for 100-baggers. After all, stocks that can double your money 100 times are unquestionably superior wealth builders than those that multiply it ten times. The word "multibagger" refers to stocks that may multiply your investment, and spotting a multibagger stock can help you expand your money quickly. But how can one know which equities are multibaggers?
 
We'll go through the approach for looking for and investing in a multibagger stock and we can also seek help fromshare market research company to provide their research reports making it easy to analyze stocks.
 
Research For Multibagger Stock In India
 
Companies in a developing nation like India have unique growth potential. Infosys, Axis Bank, Motherson Sumi, Titan, and other well-known Indian enterprises and brands are among the country's 100-baggers. Furthermore, these and other 100-baggers in India do not belong to a particular industry or sector; historically, multibaggers have happened in a variety of industries.
 
In fact, the BSE Sensex Index, which is more broad-based, has also been a multibagger. The BSE Sensex initially hit the 100-bagger milestone in February 2006, and it has been steadily increasing since then. The level of the BSE Sensex as of March 2022 will make it a 600-bagger when compared to its founding value. As a result, discovering a 100-bagger stock in India is a distinct possibility. However, how can you spot a potential multibagger among India's tens of thousands of public and unregistered stocks?
 
Currently, there are two important methodologies for identifying multibaggers: the notion of twin engines and the rise in PE Multiples. Let's look at how you may utilize these tactics to find multibagger stocks in more detail.
 
Identify Multibagger Stocks Using The Concept Of Twin Engines
 
The notion of twin engines is featured significantly in Thomas Phelps' novel "100 to 1" as well as Christopher Mayers' book "100 Baggers." Both of these publications give a path for investors to employ in identifying equities that have the potential to become future multibaggers.
 
The mathematical representation of a Re. 1 investment growing to Rs. 100 would look something like this:
 
1 * (1+r)^t = 100
 
Where, r= average annual rate of return in percentage
 
t= time period of the investment
 
So, based on this method, if you stay invested for 30 years, your investment must increase at an average yearly rate of 16.6 percent to rise from Rs. 1 to Rs. 100.
 
Similarly, if your investment increases at a 12 percent yearly pace, it will take around 41 years for it to expand 100 times.
 
Using this calculation, you'll discover that in order to get a 100x return on your investment in 11 years, your investment must increase at a rate of 50% per year. It's quite hard to maintain such high returns over time. If you anticipate a more reasonable and cautious 15% annual return, on the other hand, it will take 33 years for your investment to increase 100 times.
 
As a result, if you can find a high-growth stock, you'll be able to attain your 100x investment goal much sooner.
 
How Do Identify High-Growth Stocks?
 
Two characteristics are usually used to identify a stock that has the potential to rise rapidly:
 
· Growth in EPS (Earnings Per Share) - A corporation that continually increases its sales, margins, and market share leads to an increase in the investor's wealth. The company's profits per share (EPS) have increased as a result of this. The rise in EPS is significant because, over time, the stock price of the corporation usually always reflects the growth in EPS.
 
· Growth in P/E (Price/Earnings) Multiple - Investors use the price/earnings multiple as a crucial valuation indicator. The P/E ratio tells us how pricey a stock is, but when we look at it over time, it tells us how valuable a business or industry has been to investors over time. As a result, a greater P/E multiple suggests that the stock has been more costly over time.
 
How to create a multibagger portfolio?
 
Your investing behaviour is the key to earning a 100x return on your investment. According to Christopher Mayer's research, it takes an average of 26 years for a firm to reach a 100-bagger. This effectively implies that even if you start investing early, you will not see your first 100 baggers until you are in your 40s or 50s. Patience, or spending time in the market rather than timing it, becomes one of the most critical components for success, and emotions may run high at times.
 
Because of the inherent volatility of stock markets, there may be times when you feel compelled to sell and cut your losses. However, investing in high-quality companies and holding the investment until it generates the desired returns is a preferable alternative.
 
As a result, the success of your 100 bagger approach will be largely determined by the companies you buy in and your ability to hang on to your assets over time.
 
Conclusion
 
So, there are three crucial elements to remember when it comes to generating money in stocks:
   
· To see the correct stocks, you need vision.
 
· Patience to keep the stocks till you obtain the required returns
 
· Courage to buy them based on your convictions.
 
A single multibagger stock may make a significant impact on your financial situation if you have the bravery and patience to execute the above. Also, seeking help from equity research analysts could be highly beneficial, as their research report may provide use enough information to analyze different stocks in the market.