Thread - How to spot a potential multibagger

Multiple fundamental parameters however we cannot be rigid on any of these parameters.

Be flexible to interpret things from bigger picture point of view.

Input 1 ~ No doubt on business survival

Come whatever event (health crisis, economic bubbles, economic recessions, political events, etc.), there should not be any doubt on business survival.

Earlier it used to be only food companies into this category, but now there are many.
Input 2 ~ Visible & sustainable growth potential

At any point of time, we can think with a certain common sense approach that if management wants, there can be a sustainable growth at any point of time.

Obviously this growth may come thru innovation, optimization, etc.
Input 3 ~ Management has vision towards growth

Management should be forward looking, should be able to read into future to build right growth avenues, should be considerate towards every stakeholder.

In addition management should be ethical & should have good social image too.
Input 4 ~ Promoter stake

There should be a reasonable skin in the game from promoter.

If in case there is a low promoter stake, then promoter should increase stake at every possible opportunity.

Also pledging should either be zero or minimal.
Input 5 ~ Debt zero or going towards zero

Debt is becoming a dirtier word at individual level as well as at corporate level.

Lower the debt, better the valuations.

Zero debt is the biggest asset.
Input 6 ~ Increasing cash flow

A company's ability to create value for shareholders is determined by its ability to generate positive cash flows, or more specifically, maximize long-term free cash flow (FCF).

Cash flow is a variable that changes with business phases

Be dynamic
Input 7 ~ Rare equity dilution

Lesser the equity dilution, better will be the valuations.

Management should avoid the equity dilution at all times.

To improve the liquidity, equity dilution is good sometimes however it should be only when the proportionate growth is visible.
Input 8 ~ Reasonable dividend

If company is showing earnings of 100 & giving dividend equivalent of just 10 or less, raise more doubts on such companies before building conviction.

It has been a great learning experience based on this parameter.

Thr shd be good dividend policy
Input 9 ~ Low PE

Lower the price earnings multiple, better multiple returns potential in future.

With the growth in earnings & with every new milestone achievement, PE gets re-rated and then there is usually a multiplier effect on stock price.
Input 10 ~ Association with a brand

If the company is having it's own growing brand or is associated with some client who itself is a brand then that's a big positive.

Read the thread again & build your own process.

More from LearnLifeWealthTravel | Dream Big, Think Growth !!

More from Economy

On Jan 6, 2021, the always stellar Mr @deepakshenoy tweeted, this:

https://t.co/fa3GX9VnW0

Innocuous 1 sentence, but its a full economic theory at play.
Let me break it down for you. (1/n)


On September 30, 2020, I wrote an article for @CFASocietyIndia where I explained that RBI is all set to lose its ability to set interest rates if it continues to fiddle with the exchange rate (2/n)

What do I mean, "fiddle with the exchange rate"?

In essence, if RBI opts and continues to manage exchange rate, then that is "fiddling with the exchange rate"

RBI has done that in the past and has restarted it in 2020 - very explicitly. (3/n)

First in March 2020, it opened a Dollar/INR swap of $2B with far leg to be unwound in September 2020.

Implying INR will be bought from the open markets in order to prevent INR from falling vis a vis USD (4/n)

The Second aspect is now, that dollar inflow is happening, and the forex reserves swelled -> implying the rupee is appreciating, RBI again intervened from September, by selling INR in spot markets. (5/n)
https://t.co/9kpWP7ovyM

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🌺कैसे बने गरुड़ भगवान विष्णु के वाहन और क्यों दो भागों में फटी होती है नागों की जिह्वा🌺

महर्षि कश्यप की तेरह पत्नियां थीं।लेकिन विनता व कद्रु नामक अपनी दो पत्नियों से उन्हे विशेष लगाव था।एक दिन महर्षि आनन्दभाव में बैठे थे कि तभी वे दोनों उनके समीप आकर उनके पैर दबाने लगी।


प्रसन्न होकर महर्षि कश्यप बोले,"मुझे तुम दोनों से विशेष लगाव है, इसलिए यदि तुम्हारी कोई विशेष इच्छा हो तो मुझे बताओ। मैं उसे अवश्य पूरा करूंगा ।"

कद्रू बोली,"स्वामी! मेरी इच्छा है कि मैं हज़ार पुत्रों की मां बनूंगी।"
विनता बोली,"स्वामी! मुझे केवल एक पुत्र की मां बनना है जो इतना बलवान हो की कद्रू के हज़ार पुत्रों पर भारी पड़े।"
महर्षि बोले,"शीघ्र ही मैं यज्ञ करूंगा और यज्ञ के उपरांत तुम दोनो की इच्छाएं अवश्य पूर्ण होंगी"।


महर्षि ने यज्ञ किया,विनता व कद्रू को आशीर्वाद देकर तपस्या करने चले गए। कुछ काल पश्चात कद्रू ने हज़ार अंडों से काले सर्पों को जन्म दिया व विनता ने एक अंडे से तेजस्वी बालक को जन्म दिया जिसका नाम गरूड़ रखा।जैसे जैसे समय बीता गरुड़ बलवान होता गया और कद्रू के पुत्रों पर भारी पड़ने लगा


परिणामस्वरूप दिन प्रतिदिन कद्रू व विनता के सम्बंधों में कटुता बढ़ती गयी।एकदिन जब दोनो भ्रमण कर रहीं थी तब कद्रू ने दूर खड़े सफेद घोड़े को देख कर कहा,"बता सकती हो विनता!दूर खड़ा वो घोड़ा किस रंग का है?"
विनता बोली,"सफेद रंग का"।
तो कद्रू बोली,"शर्त लगाती हो? इसकी पूँछ तो काली है"।