Hi, everyone! Welcome to today’s article. So in today’s article, I’m going to speak about how to identify multibaggers, and I will suggest a very specific framework for that. Super critical article, super important article. And in order to illustrate my case, I’m going to deep dive into my portfolio and I’m going to pick one controversial stock that I had spoken about earlier, roughly two, two and a half months back, I’m sitting on massive profits on that controversial stock.
So I’m going to deep dive into it help you understand the framework as to why I had purchased that stock. Then, more importantly, I’m going to pick that same framework and help you identify three multi bagger investment opportunities. So that’s the agenda for today.
And if you want to make this website a multibrand investment websaite, hit the like button. That helps us a lot in terms of spreading financial awareness, especially among retail investors. Also do check the links in the description box for some of the investment opportunities that I have outlined through my SmallCases.
So let’s get the article started. And first and foremost, let me talk about the stock that I had purchased roughly two and a half three months back. The stock’s name is J P Power, and you can see that I’m sitting on approximately 85% profit on it as I’m shooting this article on 6 January. Now, when I made this article, a lot of people said, Akshat, you have gone crazy. You are purchasing like Penny stocks. You know what? You are just misguiding retail investors. This that okay.
So I appreciate the viewpoint. But the idea behind purchasing that stock was very specific. And I want to outline the framework as to why I had purchased that stock. Now, before I jump into helping you understand the framework, let me quickly explain the concept of multibagger, because it’s very important for us to fundamentally understand what multibagger is. So essentially, whenever a stock can go up from X to, let’s say, 3X or 4X, it is considered to be a multi bagger.
There is no set definition per se, but essentially, it means that if you are buying something at 100 and it has the potential to 2X, 3X, 4X and size in a very quick span of time that is potentially considered to be a multi bagger. Now, any multi bagger or majority of the multi baggers will have these three key traits. One, they would start out with a very small base. For example, if you consider the example of Bajaj Finance, it’s a great company. But when it started out and started giving out multi bagger returns, it was a small company to begin with, because now if you invest, for example, in HDFC bank or HUL, they are great stocks.
They are cash flow rich stocks, and they are going to give you good returns. But it’s very unlikely that they are going to give you multi bagger returns. Why is that because the market cap of companies like HUL or HDFC bank is already too big.
So it’s very difficult for them to grow 2X or 3X in size. So this is the first key concept. The second key trait of a multibagger is that that opportunity will look a little bit risky. Now let me explain this by using a simple example. So let’s take the example of NFT market right now. Everyone is saying right now, almost if you go and speak and have a conversation with 100 people, everyone, almost 95% people will tell you that you know what NFT is a fad. It will go away. There is just no value in NFTs and no one will be betting on NFTs right now, or a very few people would be betting on NFTs.
Now, I’m not saying that go and invest. But please hear out the argument that the point is that in the NFT game, you have almost 95% people who are against the NFT market and probably 5% people who are supporting the NFT market or are believers in NFT. So something like NFT has a higher chance of becoming a multi bagger. Because people will shift from this bucket to this bucket. People will start jumping shifts as the NFT market gain prominence. And if it gains prominence. So therefore, anything that you invest your money in, it has