Are you planning to invest your money in the stock market for better returns? Want to identify long-term wealth creators or multibagger stock in your portfolio? Here are a few parameters to consider while identifying a multibagger stock, and some online stock market courses and stock market training institute to help you learn. Afterall, identifying a multibagger stock and taking an entry at the right time is not a cakewalk.
High Earnings Growth + High Return on Capital Employed (ROCE)
First and foremost, it is crucial to look for companies that have consistently grown in the past five years or more. Their earnings should have grown at a high rate while maintaining their return on capital employed (ROCE) above 15% for the past five years too. This is the primary feature of multibagger stock identification in share market training in Noida. Companies that have managed to compound their earnings at a high ROCE include Apollo Tricoat, GMM Pfaudler, and HLE Glascoat, and several others.
Here is a table highlighting a few multibagger stock as per stock market courses online with certificate that have consistently compounded their earnings at a very high ROCE, along with the extraordinary returns these companies have delivered.
|S.No.||Name||Sales Growth 5Yrs %||ROCE 5Yr %||5Yrs return %|
|18||C D S L||30.44||29.68||29.84|
|22||APL Apollo Tubes||27.19||25.8||41.46|
Competitive Advantage or Economic Moats
Secondly, it is vital to look for companies with a competitive advantage, such as patents, network effects, and economies of scale for them to be considered as a multibagger stock. The goal of stock market courses online with certificate is to assist students with methodologies of qualitative analysis such that students can identify such features in a company. Companies with a competitive advantage tend to have a wider edge over time. Qualcomm, Shree Cement Limited, Maruti Suzuki, and Pidilite Industries are a few examples of a few multibagger stock with a competitive advantage. With undisputed market leader in India’s adhesive, Pidilite has a huge brand loyalty. Large scale operability is the advantage of Maruti Suzuki, whereas easy accessibility to raw materials and major business in the manufacturing area vicinity are the advantages of Shree Cement. Qualcomm needs no introduction as it is the global key stake player in the cell phone technology industry. A company with great competitive advantage has the highest potential to become a multibagger stock.
Expansion into a High-Margin Business
Thirdly, as per share market training in Noida, one should look for companies that have expanded into a high-margin business. They are the most apt contenders to transform into a multibagger stock. Reliance Industries Limited is an excellent example of a company that entered the telecom space with a solid strategy to tackle the competition and saw its P/E ratio increase dramatically and changed the entire landscape.
Disruptive technology stocks are also prime candidates for becoming a multibagger stock. This is because they have the advantage of not only having their own sales but snatching clients of existing key players. The reason why they can do so is because usually a new technology makes things and tasks simpler and economical. Even if these stocks are not as much sound as a regular blue-chip company, due to market sentiments, they’ve a very high chance of becoming a multibagger stock.
Prudent Capital Allocation
Lastly, as per share market training in Noida prudent capital allocation becomes a key differentiator between a good company and a great multibagger stock. Companies listed below are a few examples which have prudently allocated capital and generated incremental ROCE greater than base year. You can even see that these companies have given massive returns to its shareholders proving to be multibagger stock.
Given below are a few examples of companies that have misallocated capital generating incremental ROCE lower than base year ROCE. Here in these companies one can see the returns of these companies is very low. Lack of incremental ROCE makes them less favourable for becoming a multibagger stock.
Low Debt to Equity Ratio
While screening for a multibagger stock, an important and obvious metric one should consider is to look at the company’s debt. Too much debt can sink a company and such a company has least chances to become a multibagger stock. In financial terms, debt or leverage means the ratio of a company’s loan capital (debt) to the value of its ordinary shares (equity).
The two ratios which one has to look for identifying a multibagger stock here are the debt-to-equity ratio and interest coverage ratio. An important point to note is high level of debt alone cannot define the company’s ability to service it. There is a good chance the companies with high debt can generate strong cash flows to service their interest cost and re-pay the debt comfortably.
Therefore, a better way to identify the risk is to check the interest coverage ratio for finding a multibagger stock as per stock market training in Noida. A higher coverage ratio is better, although it may vary from industry to industry. You can see how Vodafone Idea has tanked because of heavy debt.
To learn more about stock market investments, you can take online share market courses from stock market training institute. Some online courses come with certificates. You can explore courses offered by NSE Academy, Udemy, and Coursera, among others. If you are in Noida, you can also check out share market training in Noida. With the right knowledge and tools, you can identify many multibagger stock and grow your wealth in the stock market.
There are a variety of online share market courses available, ranging from beginner-level courses to advanced courses that cover complex trading strategies. The best online stock market courses will provide you with a comprehensive understanding of the stock market and the various factors that influence stock prices. You will learn how to read financial statements, analyze market trends, and develop a solid investment strategy that aligns with your financial goals.
If you’re based in Noida, you may want to consider share market training in Noida. There are a number of training institutes in Noida that offer courses on the stock market and investing. These courses can help you develop a solid understanding of the stock market and provide you with the skills you need to make informed investment decisions.
Overall, whether you choose to take online stock market courses or enroll in a stock market training institute, investing in your education is an important step towards achieving your financial goals. With the right knowledge and skills, you can navigate the stock market with confidence and build a strong portfolio of investments that will help you achieve long-term financial success through several multibagger stock.