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As investors, we strive to find multibagger stocks and an excellent way of doing that is by studying stocks that have delivered high returns in the past. This video was inspired by an article I read in the Economic Times that featured 44 stocks from within the Nifty 500 that have delivered over 1,000% returns since the Narendra Modi government took power in 2014. I have attempted to analyze these stocks as a portfolio and delve into the reasons behind their success which should help improve our own investing decisions and potentially identify future multibaggers.
I have used the best elements from a number of investing strategies and portfolios I have featured in past videos and we are looking at 8 important parameters in this video:
1. Sales Growth - Our 44 superstar stocks have averaged a revenue increase of 15% per annum but also watch out for consistency and reasons behind their sales growth
2. EPS Growth - On an average, a 15% EPS growth led to an average share price appreciation of almost 24% in our 44 stocks. I believe the sweet spot is around 20-25% and that's what we investors should aim for
3. Return on Capital Employed - The ROCE average came to 23% and if the company displays increasing ROCE then its all the more better
4. PEG Ratio - Introduced by Peter Lynch, stocks with a PEG ratio of less than 1 are considered undervalued and it's safer to go for companies where this number is below the Nifty500 median PEG ratio of 1.4
5. Capital Employed Turnover Ratio - A high ratio is always better but its a relative measure and look for stocks whose capital employed turnover ratio is above their industry average
6. Increasing Cash Flow from Operations - It's a vital metric for companies and as investors, we should strive for companies where this number is growing and not declining or erratic
7. Forensic Analysis - In the study, we examined stocks for a high cash flow from operations as a percentage of EBITDA and low contingent liabilities as a percentage of net worth
8. Fragility Scorecard - A recent addition to our investing toolkit, we evaluate our 44 superstar stocks against four key metrics i.e. equity as a percentage of total liabilities, breakeven sales as a percentage of actual sales, ROCE, and cash flow from operations as a multiple of yearly debt obligations plus replacement capex
👉 Useful Resources:
‣ My Playlist with many Stock Market Investing Strategies : [ Ссылка ]
‣ Economic Times Article : [ Ссылка ]
👉 Video Chapters:
00:00 44 Stocks That Returned 1000% in 9 Years
01:50 1. Sales Growth
03:29 2. EPS Growth
04:42 3. Return on Capital Employed
06:16 4. PEG Ratio
07:25 5. Capital Employed Turnover Ratio
08:51 6. Cash Flow from Operations
09:55 7. Forensic Analysis
12:47 8. Fragility Scorecard
14:12 Shankar's Viewpoint
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Disclaimer: I am not a SEBI registered investment advisor or research analyst. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented
