Obtaining significant returns on an investment is one of a stock market investor’s objectives, but finding such stocks takes a lot of work.
The stock market can be a great way to grow your wealth, but it’s important to choose the right stocks to invest in. Multibagger stocks are those that have the potential to grow manifold and generate significant returns over the long term.
Even while multibagger stocks are the ones that provide enormous returns, there should be other measures used to find them.
One of the best multibagger stocks to consider buying now is Tesla (TSLA). The company has been leading the electric vehicle revolution and has a dominant market share in this space. Its innovative approach to sustainable energy and transportation has been driving its growth and could continue to do so in the future.
Another multibagger stock to consider is Shopify (SHOP). The company provides e-commerce solutions to businesses, and its platform has seen tremendous growth in recent years. With the pandemic accelerating the shift towards online shopping, Shopify’s revenue growth has been impressive, and it could continue to be a market leader in the e-commerce space.
Learn how to recognize multibagger stocks, their characteristics, and their associated dangers in this article as we examine India’s most incredible multibagger stocks (2023).
How do multibagger stocks work?
Equity shares of a firm that have produced several times better returns than their related purchase costs are known as multibagger stocks.
A stock that doubles in value is called a two-bagger in plain English. A stock is a multibagger if it has increased numerous times after its initial investment.
Through slow compounding, money may be created with a multibagger stock over a lengthy period. Most of these stocks are small or mid-caps with solid growth potential.
Detailed information about the best multibagger stocks for 2023:
1. Varun Beverages Ltd.
A large-cap firm that manufactures, bottles, and distributes drinks is Varun drinks Ltd, which was founded in 1995. As a franchisee of PepsiCo, the business runs. In India, Varun Beverages has 30 production facilities.
The stock’s absolute gains over the past five years have totaled 665.06%. The business’s 5-year CAGR is 50.05%.
2. Tube Investments of India Ltd.
In 1959, TI Cycles of India and Tube Products of India were combined to form the business. Tube Investments of India Limited is a manufacturing firm with a mobility emphasis situated in India.
The company’s three business sectors are engineering, metal-formed goods, and mobility.
The business’s 5-year CAGR is 60.59%. The stock’s absolute gains over the past five years total 983.93%.
3. Tanla Platforms Ltd.
Tanla Platforms Ltd., a telecom infrastructure company with a 1995 incorporation, offers end-to-end solutions. The firm offers messaging, telephony, Internet of Things (IoT), and other cloud communications technologies in addition to creating and selling computer software.
Tanla Platforms serves a global market through its development center in Hyderabad and its global marketing office in the United Kingdom.
This midcap stock has had absolute gains of 1,381.62% and a CAGR of 73.18% over the past five years.
4. Linde India Ltd.
In 1935, Linde India was founded, making it one of the oldest businesses. It was initially known as BOC India Limited, and its primary activities include the production of compressed or liquefied inorganic industrial or medicinal gases and the building of utility projects.
This midcap stock has generated 751.61% absolute gains over the past five years and a CAGR of 54.25%.
5. Alkyl Amines Chemicals Ltd.
Alkyl Amines compounds, founded in 1979, is a leading provider of amines and amine-based compounds to the pharmaceutical, agrochemical, rubber chemical, and water treatment sectors. It rose to become one of the top amine producers on the planet.
In the previous five years, the stock’s absolute returns were 802.11%, and its five-year CAGR was 54.96%.
Characteristics of multibagger stocks:
1. Expanding profits and sales:
A company’s revenue and profit should consistently increase as good signs. A good sign of a company’s increasing wealth is rising Earnings Per Share (EPS).
2. Low debt:
A business that has too much debt might fail. It makes sense to look at a company’s debt and associated ratios. A more excellent debt-to-equity ratio suggests the firm aggressively uses outside funding to finance its expansion.
3. Competitive advantage:
A sustainable competitive advantage should exist for the business in the market. A key element in deciding whether a firm can weather the storms and come out on top is the caliber of the underlying business.
4. Ability to grow:
To finance upcoming expansions or dividends, the corporation should be able to increase free cash flow. The quality and scalability of the company’s goods and services, as well as competent leadership and management, all play a part in this.
5. Better returns:
Several indicators may be used to gauge a business’ operational effectiveness and potential for future growth. The metrics Return on Equity (ROE) and Return on Capital Employed (ROCE) are two examples. They should be watched to see if the stock is doing well.
6. High-profit margins:
Enhanced profit margins are another sign of a multibagger stock. Profits are expected to rise if the firm progressively changes pricing and tweaks its costs.
Investor favorites include multibagger stocks. They provide returns that are multiplied and keep your portfolio in the black. It is best to conduct research or speak with a financial counselor before making any investing decisions.