And the answer is
Yes!
We do not need to look back a long time to say that we had companies which used to be good companies with reasonable market capitalization and now they are behemoths.A good look at our own bourses over the period of last 20 years and we get our answer. Of course the SENSEX itself has become a 100 bagger over last 30 years. And individual companies have done much more than that. I am not going to talk about the TCS, Infosys or other behemoths. Neither of BOSCH, HUL,ITC or other such companies. Their history is well documented over a 1000 more blogs and websites. Let us talk of some companies that have not been part of the indices and yet have done exceptionally over last 15-20 years.
Here is a list of couple of companies which have become multi-baggers over this span of time.And remember these stocks are shown only for purpose of illustration. 'Patient Investor and opulence' do not suggest, intend or seriously advice to invest . You your own financial discretion or consult a proper financial adviser.
* Close price adjusted for dividends and bonus and splits.
Now we have all heard people saying that past performances are not indicative of future accomplishments. And it is equally true that the stocks those have become 100 baggers in the last couple of years may not replicate their performances owing to their mammoth sizes. But as Charlie Munger says that even if you buy a very good company at an expensive price it shall still create substantial wealth for you in the future. And in order to look frantically for 100 baggers please do not invest in penny stocks or start up companies.
Never dare to invest in penny stocks or start up companies unless you have it extremely well researched or you are a certain Mr. Buffet!!!
So people certainly have had their shares which became 100 baggers. India has a couple of them. Mr. Ramdeo Agarwal. Mr. Ramesh Damani , are few names to reckon with . And as the famous saying of Mr. Agarwal and his company goes " Buy Right! Sit Tight!" But then comes a series of questions.
1. How do we buy a 100 bagger?
2. When to buy a stock so that it can become a 100 bagger?
3. How long does it take to become a hundred bagger?
4.Who can guide me to buy a 100 bagger?
5. How much money is needed to buy stocks so that is become 100 baggers?
6. How will India do as a country in next 10 years?
7.What are the sectors that will be the most influential during these years?
We cannot buy a multi-bagger. We can hope that it becomes one with right management and justified growth projection. To be very honest we can hope to buy a hundred bagger when investor confidence is at its lowest . For example 2008 was a fabulous year for such investments. This February also gave us a very good opportunity to investment in some potentially good stocks for the future. As we have seen that it takes more than 15-20 years for a very good quality stock to become a multi-bagger. The bottom line is if you can invest and sit down doing nothing over this very long period of time the you can certainly make the most out of it. No one can guide people to buy 100 baggers. People bring out probability studies based on fundamentals of the company. India has been doing splendidly well for the last couple of years. And in 2016 , India has overtaken China as the largest growing economy in the World clocking a fantastic 7.5% growth with China following closely with 6.8 % ,which too is very good. The economists expect India to be clocking an astronomical 8-8.25% GDP growth in the next nine to ten years which by any standards of economic is mesmerizing, to say the least.Now what are the sectors that are going to do well? Think !
Well the logistics do very well when a country's economy booms. The infrastructure does well .The banking does well. The ports do well. Metals and mining do well. Healthcare does well .And... the niche company does the best! If you are interested in niche companies you can go through one of my older blogs. The link is here.
http://investorbodhisattwa.blogspot.in/2016/05/niche-market-and-emerging-companies.html
Ok. So there must be some way out to figure exactly what fundamentals allow a company to go the 100 bagger way. According to experts and long time investors the first thing you need is extreme patience. The problem is people become long term investors only after they have invested and had seen their shares going down by 30-40% !! And there will be people who invested in the most opportune of all moments and saw their shares doubling in six to eight months. The fear of losing all the 'profit' they sell them as fast as they can. And when they find their sold shares going beyond the price they have sold they invest in the same shares again after they have risen substantially. And the inevitable happens. The shares correct by 50% and they are out of the market never to return. Do you sell you business when it is doing extremely well? You only invest more time and energy to see it growing and expanding like anything. So goes the case with a share. A share is part ownership of a business. If the business does well consistently over the years so does the share.
The second most important thing while looking for a multi-bagger is its ability and potential to grow and grow consistently. All 100 baggers have grown consistently over a very long period of time.
The third important characteristic of a 100 bagger is its return on invested capital . Usually a 100 bagger have ROIC between 18-20% every year.
Increase in share holders fund is another important characteristics. Share holders fund get increased by an impressive rate every year suggesting that the company is growing and has sufficient ability to reward its investors.
Beware of companies that take debts or leverage itself for inordinate expansion mode which ultimately causes the downfall of the company. Never invest in such companies whose debt-equity ratio is more than 2 or has been increasing over the last five or six years. they are sure shot success for doom ,gloom and absolute destruction.
Though companies at a point of time need leverage to expand, yet it must be kept in mind that companies growing at superior speed must stop when the steam is out.
Some analysts look at PEG(Price-earnings growth ratio) to determine the future revenue of the company.
Some analysts look to the ROE(Return on Equity) for potential multi-bagger. Buffet felt that companies with ROE over 14 will do reasonably good for themselves.
And the most important thing of all is to avoid all the noises made by the business channels about the macro events.
IGNORE THE MACRO EVENTS!
If the shares fall below their intrinsic value buy them!
So its no point thinking what can be a 100-bagger. Think what company is going to do extremely well in next 20 years, which will also indicate the sustainability of the company!
1. Aim to beat inflation.
2. Aim to beat expenses.
To live without financial worries aim the following:
Simplest of equations:
1.Income> expenses
2. Investments>expenses
3.Returns> Expenses.
Disclaimer: This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice.Please contact an independent financial professional or adviser for advice regarding your particular and specific situation.
Yes!
We do not need to look back a long time to say that we had companies which used to be good companies with reasonable market capitalization and now they are behemoths.A good look at our own bourses over the period of last 20 years and we get our answer. Of course the SENSEX itself has become a 100 bagger over last 30 years. And individual companies have done much more than that. I am not going to talk about the TCS, Infosys or other behemoths. Neither of BOSCH, HUL,ITC or other such companies. Their history is well documented over a 1000 more blogs and websites. Let us talk of some companies that have not been part of the indices and yet have done exceptionally over last 15-20 years.
Here is a list of couple of companies which have become multi-baggers over this span of time.And remember these stocks are shown only for purpose of illustration. 'Patient Investor and opulence' do not suggest, intend or seriously advice to invest . You your own financial discretion or consult a proper financial adviser.
|
Name of Share
|
Value
|
Value on 8.6.2016
|
Last dividend paid
|
|
Hindustan Zinc
|
Rs 1.90 on 1.1.2001
|
Rs 170.25
|
Rs 24
|
|
Exide Industries
|
Re. 0.84 on 1.7.2002
|
Rs.163.5
|
Rs 1.60
|
|
DHFL
|
Rs.2.46 on 7.10.2002
|
Rs. 200.45
|
Rs.3
|
|
Cipla
|
Rs 4.25 on 1.1.2001
|
Rs. 472.15
|
Rs. 2
|
|
Eicher Motors
|
Rs 20.85 on 1.1.2001
|
Rs 18,824.55
|
Rs. 100
|
|
La Opala RG Ltd
|
Rs.3.93 on 16.3.2007
|
Rs.554
|
Rs.1.3
|
|
Tata Coffee
|
Re. 0.23 0n 16.8.2002
|
Rs. 86.9
|
Rs. 1.3
|
* Close price adjusted for dividends and bonus and splits.
Now we have all heard people saying that past performances are not indicative of future accomplishments. And it is equally true that the stocks those have become 100 baggers in the last couple of years may not replicate their performances owing to their mammoth sizes. But as Charlie Munger says that even if you buy a very good company at an expensive price it shall still create substantial wealth for you in the future. And in order to look frantically for 100 baggers please do not invest in penny stocks or start up companies.
Never dare to invest in penny stocks or start up companies unless you have it extremely well researched or you are a certain Mr. Buffet!!!
So people certainly have had their shares which became 100 baggers. India has a couple of them. Mr. Ramdeo Agarwal. Mr. Ramesh Damani , are few names to reckon with . And as the famous saying of Mr. Agarwal and his company goes " Buy Right! Sit Tight!" But then comes a series of questions.
1. How do we buy a 100 bagger?
2. When to buy a stock so that it can become a 100 bagger?
3. How long does it take to become a hundred bagger?
4.Who can guide me to buy a 100 bagger?
5. How much money is needed to buy stocks so that is become 100 baggers?
6. How will India do as a country in next 10 years?
7.What are the sectors that will be the most influential during these years?
We cannot buy a multi-bagger. We can hope that it becomes one with right management and justified growth projection. To be very honest we can hope to buy a hundred bagger when investor confidence is at its lowest . For example 2008 was a fabulous year for such investments. This February also gave us a very good opportunity to investment in some potentially good stocks for the future. As we have seen that it takes more than 15-20 years for a very good quality stock to become a multi-bagger. The bottom line is if you can invest and sit down doing nothing over this very long period of time the you can certainly make the most out of it. No one can guide people to buy 100 baggers. People bring out probability studies based on fundamentals of the company. India has been doing splendidly well for the last couple of years. And in 2016 , India has overtaken China as the largest growing economy in the World clocking a fantastic 7.5% growth with China following closely with 6.8 % ,which too is very good. The economists expect India to be clocking an astronomical 8-8.25% GDP growth in the next nine to ten years which by any standards of economic is mesmerizing, to say the least.Now what are the sectors that are going to do well? Think !
Well the logistics do very well when a country's economy booms. The infrastructure does well .The banking does well. The ports do well. Metals and mining do well. Healthcare does well .And... the niche company does the best! If you are interested in niche companies you can go through one of my older blogs. The link is here.
http://investorbodhisattwa.blogspot.in/2016/05/niche-market-and-emerging-companies.html
Ok. So there must be some way out to figure exactly what fundamentals allow a company to go the 100 bagger way. According to experts and long time investors the first thing you need is extreme patience. The problem is people become long term investors only after they have invested and had seen their shares going down by 30-40% !! And there will be people who invested in the most opportune of all moments and saw their shares doubling in six to eight months. The fear of losing all the 'profit' they sell them as fast as they can. And when they find their sold shares going beyond the price they have sold they invest in the same shares again after they have risen substantially. And the inevitable happens. The shares correct by 50% and they are out of the market never to return. Do you sell you business when it is doing extremely well? You only invest more time and energy to see it growing and expanding like anything. So goes the case with a share. A share is part ownership of a business. If the business does well consistently over the years so does the share.
The second most important thing while looking for a multi-bagger is its ability and potential to grow and grow consistently. All 100 baggers have grown consistently over a very long period of time.
The third important characteristic of a 100 bagger is its return on invested capital . Usually a 100 bagger have ROIC between 18-20% every year.
Increase in share holders fund is another important characteristics. Share holders fund get increased by an impressive rate every year suggesting that the company is growing and has sufficient ability to reward its investors.
Beware of companies that take debts or leverage itself for inordinate expansion mode which ultimately causes the downfall of the company. Never invest in such companies whose debt-equity ratio is more than 2 or has been increasing over the last five or six years. they are sure shot success for doom ,gloom and absolute destruction.
Though companies at a point of time need leverage to expand, yet it must be kept in mind that companies growing at superior speed must stop when the steam is out.
Some analysts look at PEG(Price-earnings growth ratio) to determine the future revenue of the company.
Some analysts look to the ROE(Return on Equity) for potential multi-bagger. Buffet felt that companies with ROE over 14 will do reasonably good for themselves.
And the most important thing of all is to avoid all the noises made by the business channels about the macro events.
IGNORE THE MACRO EVENTS!
If the shares fall below their intrinsic value buy them!
So its no point thinking what can be a 100-bagger. Think what company is going to do extremely well in next 20 years, which will also indicate the sustainability of the company!
1. Aim to beat inflation.
2. Aim to beat expenses.
To live without financial worries aim the following:
Simplest of equations:
1.Income> expenses
2. Investments>expenses
3.Returns> Expenses.
Disclaimer: This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice.Please contact an independent financial professional or adviser for advice regarding your particular and specific situation.
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