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How Does Fundamental Research Help To Find Multibagger Stocks?

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How to Find Multibagger Stocks : 5 Factors to Consider
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Find Multibagger Stocks?

Do you know what’s common among Eicher Motors, Finolex Cables and Phillips Carbon?

All these are Multibagger stocks that have given manifold returns due to the inherent strength of the business model and strong fundamentals of the company. Multibagger stocks have the potential to appreciate multiple times over a long period. Multibagger stocks are often challenging to discover but can be discovered through fundamental analysis that helps you create a winning portfolio.

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As Warren Buffett rightly says, “Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”

Here are a few indicators that can help you find Multibagger stocks recommendation and Identify which multibagger stocks to buy:

1. Debt ratio:

Companies with zero or low debt make great Multibagger stocks over the long term as they are safer to invest in due to their low leverage.

2. Consistent cash flows with high growth potential:

Companies with stable cash flows, sound business models and high growth potential often feature at the top while scouting for a Multibagger stock recommendation.

3. Shareholding pattern:

The stake of the promoters in the company is one of the key elements to look for while identifying Multibagger stocks in India. A higher promoter shareholding shows the seriousness of the management to take the company forward. With the shareholding pattern, one needs to look at the pedigree of the management, their experience, vision and commitment to scale up the business operations.

4. Earnings per share (EPS) and price multiple:

To spot a Multibagger stock, you need to keep a sharp eye on the Earnings Per Share (EPS) and price multiple of the company. A comparative analysis of the P/E multiple with the industry average and peers in the market will tell you whether the stock is undervalued or overvalued. A Multi-bagger stock is usually a stock that is undervalued, has a sound business model, enjoys a significant margin of safety and is run by management that has skin in the game.

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5. Health of the financial statements:

The company must display good financial statements and a healthy track record for at least 3 previous years. As an investor, it is recommended to check whether the company is consistently growing in bottom-line and top-line numbers. Along with these, other qualitative parameters such as corporate governance policies, risk management processes, and the USP of the business need to be looked out for.

These parameters can help you to identify the Best Multibagger stocks recommendation in India. Finding a Multi-bagger stock can be very time consuming and requires lots of effort. But if you are ready to put in a little hard work to find Multibagger stocks in India using the tips mentioned above, your wealth creation journey can be enriching.

Suppose you don’t have the time and expertise to discover the future Multibagger stock. In that case, you can hire the services of the equity research firm that can help you identify Multibagger stock by conducting exhaustive due diligence and research.

Check out our Latest Article on How Long term investing helps create life-changing wealth – TOI


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