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Top 5 Multi-bagger Stocks for FY24

Coined initially by the legendary Peter Lynch, the term “multibagger” has been the subject of much discussion, deliberation and argument in the stock market universe. The term was first mentioned in the ace investor’s book, “One Up On Wall Street”. The term is popular in the stock market today and exemplifies among stock companies. 

It is no secret that the stock market can take any investor on a dynamic ride, either to a destination of success or failure, depending on several factors related to investing in the markets. Still, there are those investors who think that multibagger stocks could be the main investment options for them. What are they and how do they potentially work for investors? 

What are multibagger stocks? 

What are multi-baggers or multi-bagger stocks? How in the world do you identify such stocks? How are they different from any other stocks? Worry not. The questions that plague investors about multibaggers can be answered easily. Investors may have come across a stock which is not very pricey to begin with. However, over time, this particular stock could see returns that may be many times higher than the cost of acquiring it. These kinds of stocks are multi-baggers. Essentially, they are those stocks that are undervalued, but have robust fundamentals. These are the qualities that such stocks present as potentially lucrative investment options.

In his bestseller of a book, Peter Lynch goes on to state that investors may do well in the stock market as long as they know what investments they are getting into. The crux of any investment lies in doing the background checks on a company, the company’s business model, and other fundamentals that tell investors what a particular company, and its stock, is all about. Lynch goes on to say that investors can witness potentially fruitful returns if they invest in companies whose assets are undervalued. Furthermore, he stresses on long-term investment with multi-baggers as being beneficial to investors. Investors may identify multibagger stocks by looking at the company’s fundamental values. 

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Top-Notch Multibagger Stocks

Multibagger stocks are like hidden treasures. Once you find them, they can yield possible remarkable returns for investors. Multibaggers are those stocks that have tremendous potential for growth in the industry from which they come from, have a competitive advantage in some way, and have shown overall satisfactory financial performance. A company may be undervalued by the markets, but may still have the potential to rise in the future. Here are some multibaggers worth some consideration for any investor:

  • Usha Martin 

This is a small-capitalisation company which may just be on the verge of a breakthrough. A company that is looking to expand, Usha Martin is the leader in the Indian wire and rope market in India. Globally, it is in the top five manufacturers of these goods, predominantly in the manufacture of steel wires, cords and related products. 

An architectural hardware manufacturer in India, this is a company that has seen significant growth and is planning to consider a stock split soon. One of the largest producers and distributors of aluminium hardware, the company also manufactures door locks and related products. 

This is a finance company that has already turned into a multibagger in a span of ten years, but is on the path to further growth. A non-banking finance corporation, the company has plans to set up a banking division. It has a broad lending portfolio that extends to SMEs, retail and commercial customers and has a reach into urban areas and rural India. 

This is a small company that caters to decision support services and data management services across the sector of banking and finance, life science and healthcare, energy, logistics and supply chain, environment and education. With such diversified clientele, the company is on the path to growth with winning customers and expanding its reach. 

  • DB Realty

The real estate sector is booming right now, and if investors wish to explore a multibagger in the making in this sector, then DB Realty could be considered for long-term investment. Although the company has some corporate governance issues, the situation of debt has eased and the developer is on the road to cash flows being generated from diverse projects. 

Bagging Those Multibaggers

The companies mentioned are just a few in  a long list of multibagger stocks that investors may explore to diversify their financial portfolios. Companies like Venus Pipes, Neogen, Prime Industries, Artemis Electricals, Alfa Transformers and more are there for investors to explore. 

Relevant ratios to consider before you decide on investing in potential multibaggers are the return on equity, free cash flow, price-to-earnings, and price-to-book ratios. Once investors analyse these for any small to mid capitalisation company that they believe will turn into a multibagger, they may invest according to their investment goals and financial requirements. 

 

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