November 27, 2017

Written on Oct 13 2017

The term multibagger implies that the stock is able to move 5X, 10X, 20X, 50X or
100X over various time periods. Keeping that in mind, most large caps are out of
the question, as they are more about providing stable & consistent returns -
something like a 12% - 18% CAGR - never can they be multibaggers. Some of them have
done well like, Maruti, Bajaj Finance, Bajaj Finserv etc. The S&P BSE Sensex
rallied 25 percent, while the S&P Smallcap index nearly doubled in the last three
years.
In the last 6 - 8 months, I had written answers and blogs, highlighting stocks like
Uniply Industries, Meghmani Organics, DHFL, Centrum Capital, Phillips Carbon,
Shakti Pumps, Goa Carbon, Graphite India, HEG, Rain Industries, Himadri Chemicals,
Prakash Industries, Sunflag Iron & Steel, Bajaj Finance and many more stocks. Most
of these stocks have atleast doubled, some have given more than 5X returns in this
year itself. U can check my previous answers where I have outlined the possible
reasons on why these stocks will out perform.
Hence small and midcaps along with micro caps are the most common categories which
give such multibagger returns. For list of stocks with excellent returns in 2017
itself, read this: Gopal Kavalireddi's answer to What are the top mid cap and small
cap stocks in 2017?
Investors who were not scared to take some risk ended up making up to 6,000 percent
return in the same period.
As much as 30 stocks[1] gave over 1,000 percent returns in the last three years,
while 428 stocks in the S&P BSE Smallcap index more than doubled investor wealth
over the same period.

So, coming now to the list of stocks with a good probability of giving multibagger
returns over the next 3 years are given below and if you read the answers, you will
know the reasons. I don�t just like to give the names of stocks without proper
research.
Chemicals: Fineotex[2], Meghmani[3], Himadri Specialty, Bodal Chem.
Financials: Yes Bank[4], Centrum Capital[5] , South Indian Bank, Edelweiss[6] , L&T
Financial Holdings, DHFL, Bajaj Finance[7]
Consumer related: Tata Global Beverages[8] Future Consumer[9]
Pharma: Granules India[10], SMS Pharma, Marksans Pharma[11]
Cement: Rain Industries[12] , India Cements
Metals: Prakash Industries[13] , Nalco, Sunflag Iron
Defence related: BEL, BEML
Petro Chemicals: Goa Carbon[14] , HEG
Automotive: Ashok Leyland[15]
Like this, I can give you a long list of stocks which have good potential to be
multibaggers over the next 2 -3 years. Do remember, that there are more than 118
sectors under which all the 7110 stocks are listed on the BSE, and it is difficult
for anyone to invest in all. So choose the ones on which you have good conviction,
after a little bit of your own research and start investing slowly, little by
little.
Don�t wait for a great correction or an absolute bottom. It never works that way.
Put in 15% of your investment now and for every 150 point change in the Nifty or
7.5% decrease in the stock price, invest another 15%, till you are completely
invested by Mar 2018.
All you need to do after that, is to have patience for the next 3 years, while
reviewing the performance every quarter, analyzing the financials and making any
course correction, if necessary.
This would be the best approach going forward.
Image credits: moneycontrol website with info from Capitaline.
Footnotes
[1] 3 years of Modi govt: 30 smallcap stocks gave 10-bagger returns
[2] Gopal Kavalireddi's answer to What is your opinion about Fineotex chem?
[3] Gopal Kavalireddi's answer to What is your view about Meghmani Organics stock
as an investment?
[4] Gopal Kavalireddi's answer to Isn't it the right time to invest in Yes Bank
until the approval of a face value split?
[5] Gopal Kavalireddi's answer to Which stocks should I buy for Rs. 30,000 in the
Indian stock market?
[6] Gopal Kavalireddi's answer to Is it the right time to buy Edelweiss stock now?
What will be the future target?
[7] Gopal Kavalireddi's answer to Is it the right time to buy 160 equity shares of
Bajaj Finance stock in the Indian stock market?
[8] Gopal Kavalireddi's answer to Which are the multibagger stocks we can invest in
the month of August 2017 which are below 200 Rs in the Indian stock market?
[9] Gopal Kavalireddi's answer to Is Future Consumer Ltd. a good buy for the long
term?
[10] Gopal Kavalireddi's answer to Which are the multibagger stocks we can invest
in the month of August 2017 which are below 200 Rs in the Indian stock market?
[11] Gopal Kavalireddi's answer to Why Marksans pharma is falling?
[12] Gopal Kavalireddi's answer to Is this a good time to buy Rain Industries
stocks? What expectations can we have from this share?
[13] Gopal Kavalireddi's answer to Which of the stocks is better and why, Manaksia
Steels, Prakash Industries, or Sunflag Iron and Steel Company?
[14] Gopal Kavalireddi's answer to What is wrong with Goa carbon stock? It is going
down heavily on the NSE.
[15] Gopal Kavalireddi's answer to Can I buy Ashok Leyland shares at 90 and hold it
for 6 months for better returns?