A stock is referred to as a "multibagger" if its value increases by multiples after an initial investment. These stocks might be inexpensive but have solid fundamentals and can increase an investor's return on investment by a factor of multiples. Multibagger stocks promise excellent corporate governance and quickly scaleable businesses.
The important features of multibagger stocks are :-
- Low-debt:-A low-debt company is a Zero to a multibagger stock. While the definition of a low-debt company varies by industry, it is generally accepted that debt that is less than 30% of equity value is healthy.
- Sources of income:-Look at the sources that contribute most to the company's income. The stock may merit being a multibagger in the future if the revenue sector appears to be rising at a macro level and the operations seem easily scalable.
- Quarter-on-quarter performance:-Pay attention to the company's(Quarter on Quarter) QoQ revenue multiples. Low multiples could be a sign that the company has a significant upside potential.
- Earnings and price multiples:-Check the price-/-sales and PE ratios based on the revenue and trailing 12-month EPS Increasing the PE level above the stock price more quickly shows multibagging.Based on the trailing 12-month EPS and revenue, check the current PE and price/sales ratios. Being a multibagger is indicated by a faster increase in the PE level over the stock price.The management history, corporate strategy, and yearly reports may all significantly affect stock growth
