As you well know, we often use i “FILTERS” to complement our approach with an objective view, and at the same time it is a way to identify the strongest growth stocks as they “grow” their market capitalization from small to medium, up to reaching mega cap status (over 200 billion dollars).
With InvestingPRO we can set filters to search, identify and “follow” the possible growth of each individual company until it reaches 100 billion dollars.
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I’ve heard of “bagger” for the first time in the book One Up on Wall Street (released in 1989) by Peter Lynch, mentioning Microsoft (NASDAQ:), Dell, Nvidia, Apple (NASDAQ:) and many others who would have been on this watchlist before becoming the giants they are today.
But how often do ten baggers or more occur in stocks?
Investors in the 1980s saw 100 bagger returns as the years went by. In fact, the S&P 500 index has grown over 13,000% in the same period, with annual returns of over 11%. It’s every investor’s dream, to buy a stock at a low price, and sell it some time later for 100 times its value.
If we take the list of US 100-baggers from 1962 to 2014 there are almost 400 of them, but how do we find a 100x stock and what are the aspects these have in common?
In the “filter” section, we have set three main features: compound annual earnings growth greater than 20% over the last 5 years, a P/E ratio between 5 and 10 and a market capitalization between 2 – 30 billion, excluding stocks from sectors that usually fail to reach market share quickly $100 billion, so you won’t find any utilities or basic consumer goods.
We can see that within the global markets (we have not selected anyone specifically) we have 24 titles (in random order) on a database of over 163 thousandwhich present these characteristics.
Will there be a 100-bagger among these?
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Until next time!
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“This article was written for information purposes only; it does not constitute a solicitation, offer, advice, consultancy or investment recommendation as such it is not intended to encourage the purchase of assets in any way. I would like to remind you that any type of asset is evaluated from multiple points of view and is highly risky and therefore, every investment decision and the related risk remain the responsibility of the investor”.
