
5 Key Traits of Potential Multi-bagger stocks.
Finding Multi-bagger stocks are the dreams of the stock market investors.
If you have invested in ten stocks and even one turned out to be a multi-bagger (giving more than 8–10 time returns), then not only it will cover up for all the other losing stocks, the returns from your overall portfolio will be amazing.
However, finding a multi-bagger stock is not an easy task. Over 5000 companies are publically listed in the Indian stock exchanges and only 100–200 companies are capable of giving such brilliant returns.
Therefore, it requires a lot of research and efforts to find the potential companies that are capable of giving multi-bagger returns in the future.
Here are 5 key traits of potential multi-bagger stocks-
- Growth: This is the most easily noticable trait in any potential multi-bagger stock. If the sales, revenue, margin and net profit of a company is consistently growing over the past many years, then its definitely a good sign. In other words, a healthy (consistent) annual growth of over 15–20% is a key trait of multi-bagger stocks.
- Low Debt: A low debt allows financial independency to the companies and hence they are able to take suitable steps towards their growth and profits. On the other hand, a high debt drags the company backward. Even quality companies cannot sustain for too long if they do not reduce their debt over time.
- Competitive Advantage: If the company has a sustainable competitive advantage and has created an entry barrier for its competitors, then definitely it can remain profitable for a longer period of time and give multiple times return in the future. The competitve advantage can be a big brand value, low production cost, patents and copyrights, first-mover, favourable government norms etc.
- Efficient Management: If the captain of a ship is efficient, then it can cover longer distance efficiently. The management of a company is similar to the captain of a ship as they are the ones who take all the important decisions regarding the company. While studying the management of a company, pay special attention towards their background, integrity, past performance, asset allocation strategies (like dividends, bonus etc), any history of past fraud/scams etc.
- Mis-priced opportunities — You can find multi-baggers returns by investing in companies who have a good potential, however, either ignored by the market or is out of flavor. This may be because of the short-term reasons or because the companies are yet to be discovered by the experts.
Also read: What are Multi-Bagger Stocks? And How to Find Them?
Multi-bagger stocks in 2017–18:
Here are few Indian multi-bagger stocks with has given over 400% returns in the last one year (Updated August 2018)-

Although finding multi-bagger stocks can be a tricky art, however if you are consistent in your research, you’ll eventually find few good ones.
That’s all for this post. I hope it was helpful to you.
By the way, 👏🏻 *clap* 👏🏻 your hands if you enjoyed this post. It encourages me to keep writing and help other people finding it :)
Take Care. And Happy Investing.
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