What is a multibagger stock?
Meaning of Multibagger Stock
MULTIBAGGER STOCK is a term that we often hear of. Though there is no specific definition available for this term. It is an investment jargon which is used by market participants to describe an equity stock which gives you multiple times return. According to layman, 100% return is defined as a single bagger, likewise two baggers give 200% returns.
For multibagger stocks you would need many bags to carry its returns. These stocks has potential to convert your meager amount into lacs in couple of years and even crores if invested for couple of decades.
One of the renowned Multibagger Indian Stock fable is of WIPRO which converted Rs.10,000 into more than Rs. 550 Crores in just time span of nearly 37 years. Know the last 10 years biggest multibagger stocks.
How this miracle happens?
Small and medium cap stocks bear foremost potential of exponential growth that eventually will convert into large cap stocks.
In this process of expansion of market cap, it converts small invested capital into large capital.
Multibagger stocks are companies that are high growth companies in early stage of life with low market share. These stocks comes under question mark categories under BCG Matrix. With time these companies market share rises due to high growth which leads to increasing sales, revenues, market cap and so the stock Price.
All stocks in a portfolio cannot turn into Multibagger. Probability is 1 out 10 could be a potential multibagger. All players cannot be sachin Tendulkar in cricket team. All stars cannot become Amitabh bachchan.
These Stocks are never frontline, but due to high future growth potential, they turn into Multibagger either due to business cycle or management capability. What makes a multi-bagger as multibagger is time and continuous business growth. Multibagger stocks demand high degree of patience. These stocks are not for intraday traders who are out to grab quick profits and exit.
They are high momentum stocks. They correct heavily with market correction but then rise back with even more momentum. These are high risk – high return stocks. Multibagger stocks are best investment for wealth building and achieving financial freedom if invested with discipline for long term.