(6) Business For A Cause
It is one of the most significant methods to find multibagger stocks. Business for a social cause or mission a moral responsibility was once related to large corporate organizations.
It is particularly due to the associated budget, dedicated time & resources which in turn was not possible for a small organization. But, it is completely changed in current scenario.
Today, more and more companies including startups are recognizing the hidden benefits of integrating a social cause into a business model. It’s a good business strategy that can easily provide competitive advantage to products & services of any organization.
Some of the benefits of centering a business on a social cause or mission include: self-satisfaction of doing something good for the world, employee satisfaction & retention, increased consumer interest, getting valuable insight from customer’s feedback that can inspire upcoming releases of the company, sustainable growth and many more.
These great benefits together make survival of the business more viable in all types of business scenarios. Additionally, company that offers products & services to make the life of people better are quickly accepted by industry.
These technologies that can redefine the way of doing things often become the game changer for the stock price in the long run.
Finally, you are advised to take the help of female traders to find customer-friendly multibagger stocks. It is due to the fact that women are usually known to be the first one to identify such hidden gems from markets.
(7) Earnings Per Share (EPS) & Price Multiples
It is one of the most common methods to find multibagger stocks. Earnings Per Share (EPS) is an important financial ratio that indicates profitability of an underlying company.
It is calculated by dividing the company’s net income with its total number of outstanding shares. Generally, a higher EPS indicates that underlying company is profitable enough to pay out more money to its shareholders.
Stock price of a company should vary mainly on the basis of quarterly performance of basic EPS reported by company. Smart investors are always interested to calculate the Trailing Twelve Months (TTM) basic EPS & revenue of a potential multibagger.
It is something necessary to calculate current stock price to EPS (P/E) ratio and price to sales (P/S) respectively. These two price multiples are significant in determining the current valuation of a company in the market.
Ideally, the EPS of a potential multibagger should be growing at a reasonable rate i.e. > 30% on annual basis and simultaneously, stock valuations should not be very high. It is because if the stock has already given a multifold return & stock valuation is very high then perhaps it is not a multibagger stock.
Therefore, investors are advised to kindly check EPS trends of last few quarters or last few years. Finally, compare it with growth in share price of underlying company. This simple comparison can help you to find true multibaggers for good speculative gains.
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