In his book “One Up on Wall Street,” Peter Lynch, one of the best mutual fund managers, created the term “ten-bagger.” The term “ten-bagger” refers to a stock that will return 1000 percent (10 times) on its initial investment. “The ideal location to begin looking for the 10-bagger is near to home — if not in the backyard, then down at the shopping mall, and especially wherever you happen to work,” says legendary investor Peter Lynch, who averaged a 29.2 percent yearly return. To pick the winning horse, one does not need to be a mutual fund manager or work in a brokerage firm. In the organization, business, or field in which he or she works, the average person who creates things, sells things, cleans things, or analyzes things encounters innumerable stock-picking possibilities.
Identifying even a few of those 10-bagger stocks could change your fortune for the better and possibly make you the game’s winner. Over the years, NEPSE has seen quite a few of those ten-baggers. In NEPSE, I’ve highlighted a few 10-baggers seen during the current Bull Run.
HDL (Himalayan Distillery Limited)
March 21, 2018 Closing Price – NPR 402
June 12, 2021 Closing Price – NPR 5,500
STC (Salt Trading Corporation)
December 4, 2019 Closing Price – NPR 972
July 12, 2021 Closing Price – NPR 9,772
RADHI (Radhi Bidyut Company Ltd.)
November 4, 2019 Closing Price – NPR 133
June 12, 2021 Closing Price – NPR 740
Please note that the price has been modified to reflect the recent bonus share. As a result, if the bonus share is included, the return is more than ten times. The shares of RADHI soared as high as Rs 1,340 before the book closure for 36.50 percent bonus share.
Key To Finding Ten Bagger Stocks:
1. Small Market-Cap Stocks
Small-cap enterprises have a lot of room to develop. It is reasonable to expect those corporations to pay high dividends in order to expand their operations. The companies listed above meet the requirements.
2. Excellent Performers In The Niche Sector
It’s no surprise that when the market picks up speed, the companies at the forefront of their respective industries will be the first to be acknowledged.
3. Businesses With Unique Ideas And A Sustainable and Open Future
Because the stock market is all about future earnings and advancement, companies with great ideas tend to soar to new heights.
4. Long Term Holding Period (At least 2-3 Years)
You can only pick up a 10-bagger if you have it in your portfolio. When it comes to selecting a 10–bagger stock, patience is the most critical tool you’ll need.
5. Diversifying Your Portfolio
Diversifying your portfolio increases your chances of finding a 10-bagger stock. Choosing ten stocks rather than just one increases your chances of winning the ultimate prize.
6. The Insiders Buying the Stocks
There’s no better proof that you’ve identified a winning stock than the fact that company employees are enthusiastically buying their own stock. You’ve scored yourself a bargain if you recognize any insiders buying the stocks.
7. The Company Itself Buying Back Stocks
If a firm is buying its own stock because it believes in its future, there is no need to wait for any other signal. It could be a 10-bagger for you.
You don’t have to work at Himalayan Distillery’s (HDL) main office or be its manager to be aware of the high-quality, made-in-the-country Golden Oak’s potential and rising sales. You may be a habitual whisky drinker, the proprietor of a whisky shop, or a company employee. You may also be a guest at a local wedding who keeps track of which drinks are the most popular. A good company’s story can always be heard on your street, in your shop, or at your office. You can be an insurance agent or a policyholder to learn about policy sales. You don’t have to be a construction worker or a resident of the impacted area to keep up with the hydropower project’s progress. In your line of work, you always have an advantage.
Using Fundamental and Technical Analysis to Confirm
There are a slew of fundamental signs that might help you figure out who the main winner is. Because we’re after the ten-bagger. As a result, getting in early is crucial. As a result, a stock with a low P/E ratio should be confirmed. It may have a bright future if the P/E ratio is already too high, but it will not be a 10-bagger. Looking for a higher return on investment (ROI) can provide you an advantage.
A long-term Bull Run is indicated by a breakout over the top of the resistance zone and the 30-week MA, which occurred on high volume. This should give you an idea of when the optimum moment is to buy the stock.
Always remember that you’re putting your money into the firm, not the stock market. There are 10-bagger stocks out there, and if you put in the effort to identify one, you will outperform the market.