How to Ace the Multibagger Stocks

How to Ace the Multibagger Stocks The changes in the stock markets can be astounding as bliss and can be traumatizing if it's a miss, and hence are discussed with much inclination. The rise and the fall of stocks are often enveloped as unsolved mysteries, depending on the fate or marked by sheer luck. So if that is the case, then how can our research experts foretell the multibagger ideas, where one believes that humans cannot be good futurists?

The bubble of this wide spread query can burst by pinning the nail of - thorough market research. Our researchers don't claim of having some super natural powers, but they do possess specialized knowledge, skills and experience which they use to predict that how a particular stock will perform in the coming days.

Multi-bagger stocks in simple terms are stocks that have the potential to perform very good over a few years of time, to yield huge profits and thus can give back returns that are multiple times greater than the price of the stock at present. They are the ideal investments for the investors who are looking for a low risk venture that can yield them liquidity within 1-2 years.

Following is a roster of various tools and techniques, which can be adhered to, when an investor desires to choose a stock which has the potential to become a multi-bagger 1. The Price-Earnings Ratio The Price-Earnings ratio of any stock is not that perceptive, but when the P/E of a company is compared to the industry's P/E, it gives a clear idea about the scope or the potential of the growth of the stock. One should check that the P/E of a stock should be ideally lower than the industry P/E. An investor should check for the saturation level of the share price of the stock, for example, the share price of a stock is low, but it has already attained the industry's P/E, then in that case, there is barely any scope for the share price of the stock to rise due to saturation.

2. Monitoring the Debt Level While an investor is looking for multi-bagger stock ideas, he/she should check on to the debt level of the company. He/she should ensure that if the Earnings per Share (EPS) are 10% p.a. then the debt of the company should not be growing more than 10% p.a. If the debt is growing more than that then it is not a genuine multi-bagger.

3. Checking the Source of Earnings If an investor deduces that the company has the scope to change scale of operations then it is the right time to invest. It is quite irrelevant to look at the capitalization category; one should just adhere to the scalability of operations.

4. Scrutinizing the Quarterly Performance The investor should study even the smallest operations of the company. He/she should check the performance of revenue, EBITDA, and net profit because it reflects the company's operating performance. It’s said that if these multiples are low and still the company is outperforming at operating level, then in that case there are chances of increase in the share price.