Given the poor performance of the stock markets over the last several months with some exceptions in between, stock market experts believe that one could create substantial wealth by investing in multibagger stocks for 2019. A major reason for this is that there are many high quality and fundamentally sound stocks which are currently trading at attractive valuations. These stocks have the potential to become multibagger stocks over the next five to six years.
There more than 5500 stocks listed on India’s top stock exchanges. But not all of these stocks can be considered as multibagger stocks for 2019. Imagine the kind of wealth that can be created, if one could identify the next multibagger stocks for 2019, before everybody knows about it and starts rushing in to invest in the stock.
The below checklist can guide you in identifying multibagger stocks for 2019:
Does the company have good historical performance?
While past performance may not be necessarily repeated in future, it still gives prospective investor and market analysts a brief peak into what they can expect in future. Any company with a consistent record of growing earnings over a long term period such as 5 years of more definitely has a great chance of becoming a multibagger stock in future.
Does the company have zero debt or low debt?
Huge debt is a burden for a company and even if a company is making profits a significant portion of the profits will be consumed by the interest on the debt. As a result, the company cannot use its surplus funds for expansion of the business. On the other hand a zero debt or low debt company has plenty of funds to expand the business or diversify leading to new streams of revenue.
Is the company well managed professionally?
Stock markets value corporate governance highly and investors don’t mind paying a premium for it. Companies with good corporate governance are well known to place shareholder’s interest before management interest and have very high standards of disclosure of information which impacts shareholders. Infosys Technologies Ltd. and Wipro Ltd. are some prime examples of companies with highest standards of corporate governance in India and have handsomely rewarded their long term shareholders with multibagger stocks.
Some other pointers to consider while looking for multibagger stocks for 2019:
- Does the business offer an exclusive product or service?
- Is there a high demand for the company’s products and low competition?
- Is the business model of the company scalable with time?
- Is the stock trading at the right valuation below its intrinsic value?
The above checklist can help you to find multibagger stocks for 2019. But remember even if you do spot multibagger stocks for 2019 before it becomes the hot favourite of the market, it is very important to buy it at the right valuation, and remain invested in it to give the business enough time to realize its true potential.
Read more: How Long-term investing helps create life-changing wealth – TOI.
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