(14) Structural Changes In Management
It is one of the important ways to identify & pick multi-bagger shares or equities. A structural change in management is something that can make a lazy stock into a great stock.
In such situation, it can give multiple returns in long run. A structural change in management of a company board of director may occur due to several reasons.
Some of them include inheritance from father to son, takeover by some fundamentally strong firm, joint-venture with a well-known brand, joining of a professional team on the top, etc.
Stock analysts, stock advisors, and smart investors are often looking for such critical changes for bargain hunting in a potential multi-bagger.
[Read Also: 25 Basic Rules For Investing Money In Stock Markets]
(15) Stock Price To Book Value (P/BV)
It is one of the most common ways to identify and pick multibagger stocks. Equities trading at low price in relation to book value or P/BV ratio is most likely to increase up to its real book value in long term.
Book value is the share holder’s equity that is arrived by subtracting current liabilities & debt from total assets. Such equities can generate super returns as compared to equities with higher P/BV ratio.
However, a stock may also trade below its book value during difficult times. You should be wise enough to identify whether its difficulties are temporary or permanent in nature.
If its difficulties are temporary in nature then it is likely to regain its lost value. These stocks can regain their share price in stock markets on return of favorable business scenarios.
- Multibagger Stocks: Shutterstock