Power of investing in Multibagger stocks

Investing in Equity has become common lately during 1990’s i.e. during the period of Globalization before that parking the money safe in Fixed Deposit was the trend in which the money used to double in approx 6.2 years!

People have now realized how important investing because of various reasons such as to high rate of return which should be above the rate of inflation and to multiply wealth so as to support future needs. One reason for many people to turn on to equity is success of various investors like Warren Buffett and Rakesh Jhunjhunwala.

Do you know investing (Rs 10K) in an equity in 1982 you could have had Rs 200 cores in 2005 ?

Check this PPT for more :

Awesome! I wish we would have bought Cipla if not Wipro at that time 🙂 We would have been super rich! But its not to late to search for one such stock!

How to choose a stock for long term :

  1. Check the market cap. Select a company preferably in a market cap of 3 figures i.e. a mid cap stock. Less the market cap the more is the advancement opportunities though that’s not always true. Check out for various parameters like management, financial of the company its vision, stakeholders, etc.
  2. Look for an upcoming sector. eg . Pharma, IT. An example is internet company “Facebook” which has given several times returns in less than 4 years of it’s listing.
  3. Look for resources Example – Land. Look for companies which have good amount of property and various other assets. Sometimes company with land bank tend to perform good when the economy is doing good as they realize a good amount on property sale.
  4. Increasing profits in balance sheet on YOY basis.Check for Profit after tax.
  5. Future Order value the company has.
  6. Be Confident on your company and also exit when needed.

Interesting read: How to select value stocks?

Share across your favorite mid cap stock and a reason why you brought it or you wish to buy it. 

1 comment… add one
  1. Kishorkumar Balpalli November 5, 2016, 7:04 am

    Hi Admin!

    Interesting article certainly!
    In addition to the factors discussed above, an investor may also look at P/E multiple and the debt burden on the company. The sole purpose is to choose a valuable company. So, on that lines, a company having high P/E multiple would be more valuable than a low P/E one. In case of mid-caps, if the company is over-leveraged, then it may face bankruptcy if it’s unable to offset the debt with commensurate business profits.

    Reply

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