These stocks from five different sectors can be multibaggers
1 Jan 2017
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Finding stocks that can give you multi-fold returns over time from an universe of over 5,000 listed entities is no child play. These stocks are generally called multibaggers and can outpace the broader market by a huge margin.
Fundamentally, multibagger stocks have the potential to grow earnings at an extraordinarily fast pace. Such stocks are rare on Dalal Street, but remind you of the power that equities hold.
Over the past five years, stocks like Ajanta Pharma (up 4,294 per cent), Symphony (965 per cent), Eicher Motors (1,350 per cent), Bajaj Finance (1,170 per cent) and Avanti Feeds (1,830 per cent) have multiplied investors' wealth several folds.
According to the Rule of 72, a stock that delivers around 24 per cent return annually can double your wealth in three years.
Market veterans say such stocks can be identified by looking at different parameters such as growth in revenues and net profit, opportunity size of the industry or the business, entry barriers of the business that the company is operating in and various operating metrics such as return on capital employed, return on assets and free cash flow beside stock valuations.
The quality of management and corporate governance also plays an important role in performing stocks.