How to pick Multibagger Stocks in India 2022
Multibagger stocks help you build long term wealth and early retirement. Multibagger Stocks in India are usually different from business cycles and are not as sensitive to the market environment. This may also lead to a lot of heartburn when there is a general market downturn. However, if you can avoid these pitfalls, you will be able to make large returns on your investment portfolio. Investing in multibagger stocks can help you get exponential returns.
Multibagger stocks are stocks that give you a marked return over a period. Buying and holding them provides very healthy returns in the long term even after factoring in the buying price. No one knows which stock will be a multibagger stock in some years but we all know that they exist because they have in the past; they do now and will continue to do so in future.
Multibagger stocks are those companies whose share price is expected to appreciate at a much faster rate than the benchmark indices. There are several ways to pick multibagger stocks. Some of them will be discussed in this article.
1. Strong and capable management
One of the basic elements for market outperformance is the ability to create and maintain a moat around its business or product. This is intended to keep away rivals, smaller entities and new entrants from profitable operations. However, not all companies are able to build a moat around their businesses and profit consistently. This is mainly because of the lack of strong and capable management.
There is a saying in the market that ‘if there is a strong and capable management, then multibagger stocks are born’. This is because if the management has the right vision and are driven, there is a long road ahead for the company that in turn attracts more capital. This sets up for multiplying gains for all shareholders.
2. Competitive advantage
Competition is fierce in stock markets, especially in India. The harsh reality is that most stocks lose money for their investors, which means picking multibagger stocks is a complicated affair. The way to pick multibagger stocks is by identifying companies that have a competitive advantage, or the ability to consistently gain market share. If you ask 100 people how to find multibagger stocks in India, you’ll most likely get 100 different answers.
3. Healthy earning growth
Multibagger stocks have healthy earnings growth. Companies with healthy earning growth have the tendency of increasing their dividend yield on a sustained basis. When the stock market is moving up, it can be really easy to pick stocks that go up. The hard part comes when the market is trending down. You need to find those stocks that can grow their earning strongly and even make you a little money on the way.
4. High Margins Businesses
The stock market can be a roller coaster ride for new investors. You might have gone through a number of ups and downs until you reach that “profitable” point in investing. It does not matter whether you are a beginner, intermediate or expert investor. No one is immune when it comes to hitting the losing streak of stocks.
Whether you are an investor who wants to make money or a running a small business, high margin businesses always rule. By looking at the margins, you can easily understand what companies are making huge profits. Combining quality with large profit margins generally give high return on investment in long-term. Apart from the quality and profit margins, high dividend yield is one of the attractive criteria for investment.
5. Growth Potential
Stock market investment or stock trading has been a simple and straightforward game for a long time- until you started to read about stocks with high returns. Of course, stocks that provide higher returns have greater risks. These stocks, known as ‘multibagger stocks’, provide good potential for gains but involve a significant level of risk.
We are all aware of the fact that no one can predict whether a particular stock will rise or fall in the future. Growth potential is all about growth rate, return ratios and valuations. All these parameters are interrelated in multibagger stocks.
6. Remain Patient
Remember to always think long term, never panic on short-term volatility. Keep fighting the good fight, and remain disciplined! Also, remember that Multibagger Stocks for Next 10 Years tend to do most of their work in the latter part of their lifecycle. So if you want to see substantial gains in your portfolio, don’t expect them right away. Patience is crucial for the investor who is looking to pick multibaggers for his or her portfolio.
Conclusion
The Opportunities in Indian market is well known to all of us as we created various blog posts and articles on the same some time back but the fact is most of us are not taking advantage of these opportunities and Indian market is waiting for the right entry point.
Getting to know about the top multibagger stocks in India is very important for anybody. If you are not able to invest in those stocks then there is a possibility that you will be missing out on the future stock market boom in India. So one must invest in these multibagger stocks as soon as possible and remember to hold them for the long term. This can give you a huge profit in the future.