The Disciplined Investor

The Disciplined Investor



I studied around 15 companies which have given Multi-bagger returns (10X, 15X and even 100X) in the past 8-9 yrs. Most had these in common:- 1. Were available at cheap valuations: - P/E < 10 - EV/EBITDA < 7 - P/B < 2 2. Were small in size: - Market Cap < 1000 Cr continued....

3. Had low or manageable debt: - Debt/Equity < 1 - Interest Coverage Ratio > 3.5 4. Had good return ratios: - Return on Capital > 12% - Return on Capital < 30% - Return on Equity > 10% 5. Had High Promoter Holding: - Promoter Holding > 40% - Insider Buying (Few) continued...

6. Generated Good Cash Flows: - CFO last 5 yrs > Market cap (Some) - CFO/FCF for a 1 yr may be negative 7. Paid Regular Dividends: - Dividend Payout: 5% to 35% 8. Were Cash Rich continued..

9. Apart from being undervalued & fundamentally strong, the multi-bagger stocks had the following characteristics: - From a growing industry - Industry should be out of favour - Company should have competitive advantage - Company should be an Industry leader (Top 1-2 player)

Disclaimers: - Not all Multi-baggers were covered in this study. - Market itself is a Multi-bagger if you hold long enough. ~ This study is based on historical data. Look at it as a pattern recognition exercise. ~ What has worked in the past may or may not work in the future.

Task: Run a screener based on the above queries and post your finding in the comments. Do a thorough research to identify which companies out of them have the potential to become a Multi-bagger according to you. And Re-tweet the first tweet if you think it will benefit others.

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