With Diwali 2019 around the corner, investors are eagerly on the lookout for multibagger stock picks. And why not? Investing in the right multibagger stock picks can create tremendous wealth and brighten up your financial health for many years to come.
Before we proceed with the best multibagger stock picks for Diwali 2019, let’s take a look at how multibagger stock picks have brightened the lives of investors who identified and invested them at the right time.
Just 18 years back, on Diwali 2001, automobile manufacturer Eicher Motors was trading for Rs. 19. Yes, you read it right. Just Rs. 25.20. Today it is trading at Rs. 19,963.45. Which means if you had invested Rs. 10,000 in the stock of Eicher Motors on Diwali 2001, the current worth of your investment in this multibagger stock pick would be around today Rs. 7,92,2003. That is precisely what Mr. Rohan Shah, an automobile engineer by profession and a long term investor from Mumbai did.
Ok if you think 18 years was a long time ago. Let’s take a look at another multibagger stock pick, Bajaj Finance which multiplied investor wealth by multiple times in the last 5 years. On Diwali 2014, Chennai resident Mr. Raju Iyer, a school teacher by profession invested Rs. 100,000 in the stock of Bajaj Finance when it was trading at Rs. 272.91. Today it is trading at Rs.4034 which means an investment of Rs. 100,000 on Diwali 2014 in Bajaj Finance stock would be worth Rs. 1478142 today.
Looking at the two investment stories mentioned above, one can certainly understand the power of multibagger stock picks to create wealth. While there may be many investors like Mr. Rohan Shah and Mr. Raju Iyer who invested in multibagger stock picks at the right time and held them patiently to create huge wealth, there are many who may have missed the bus.
Investors miss out on multibagger stocks mainly due to the inability to identify them at the right time, i.e. before such stocks become the hot favourite of the market and run-up significantly. While there is no secret formula to identify multibagger stock picks, there are certain parameters can help an investor to shortlist potential winners.
Which can help you to find multibagger stock picks for Diwali 2019.
Low or zero debt
Companies with low or zero debt have the potential to become multibagger stocks as they can use their surplus funds for expansion of business, unlike debt laden companies which are the heavy burden of interest payments which restricts them from further expansion of capacity.
Professionally well-managed companies
Companies that are well managed by a visionary team have excellent potential to grow and achieve new levels of success.
Consistent growth in earnings
A company that is consistently performing well in terms of earnings over a prolonged period of time has huge potential to become a multibagger stock.
Companies with a scalable business model
Companies that have a scalable business model that can grow rapidly with time have great potential to become multibagger stock picks.
Read more: How Long-term investing helps create life-changing wealth – TOI.