It often happens that we miss out on a share just to learn later that it has grown several times its original price. it could have happened to you too! These kinds of shares that double, triple, or quadruple your money are termed multibagger stocks. They need not shower the returns immediately but do reward you for your patience. However, investors are generally evasive to them and thus, miss out on these must-have stocks to invest.
It is important to remember that multibagger stocks are not one-shot wonders; they are high potential bearing investments that honour their investors in due time. In this article, we talk about how to find multibagger stocks and act judiciously to make them work in your favor.
How to pick multibagger stocks in India?
It is never easy to predict multibagger stocks, but it is always possible to do so with adequate research and study of facts. Following are a few pointers that can help you find multibagger stocks for next 10 years –
- Observe and anticipate trends – The first and foremost thing you should do is to observe the current and anticipate upcoming trends. Just imagine – if everyone had thought 10 years before how successful the digital industry would be today, how many people would have taken big cheques home.
- Know your company well – Another important task is to study the fundamentals of a company well. Be it the PE ratio, business model, balance sheet, management, earnings growth, or valuations- study all the key details. Also, keep yourself informed about its plans by attending its AGMs or reading its periodic reports. This helps you make an informed and well-researched decision based on facts.
- Compare different companies in the same segment – Just knowing a company well is not enough. You must also know about its standing among its peers. This helps you understand if the company is undervalued or overvalued. It also aids you in analysing the future trends of the company by comparing its performance against market leaders.
- Keep an eye on government policies – Always keep yourself up to date with the changes in government policies. For this, you should follow important government announcements in the union budget, monetary and fiscal policy, taxation laws, trade regulations, etc. This helps you forecast the future performance of different companies better.
- Give time to your investment – We often get tempted to pre-book profits seeing favourable movements in our holdings, just to later remind ourselves that Rome was not built in a day. Be patient with your investment and give it time to reach its full potential.
Investing in stock without knowledge is as risky as not investing in it despite understanding its cognitive intricacies. If you are a newbie in the stock market or are struggling to make your portfolio shine lately, try taking expert advice to achieve your financial goals.