How To Identify Multibagger Stocks? Undervalued Stocks in Volatility

How To Identify Multibagger Stocks? Undervalued Stocks & Volatile Market

This blog is about how to identify multibagger stocks during market volatility. If you as an investor searching to identify future multibagger stocks for your investment then this blog is for you.

Swings and fluctuations are what stock markets conventionally experience. Volatility reached its peak during October and November 2024. Traders would love turning market movements into profits every day. Investors should go a little longer route to maximally get returns from it. Yes during a volatile market, some investors identify the opportunity in terms of undervalued stocks that have a high potential to bag multibagger returns.

Detailed video:

 

Global market volatility can be identified with specific financial parameters, by which you will be able to make informed decisions to choose stocks with inherent robust growth. 

Fundamental Financial Metrics for Identifying Multibagger Stock

1. Piotroski Score

A comprehensive summary of the situation related to a company’s financial soundness is what the Piotroski score is all about. It is generally between 0 and 9. The higher, the better, is the definition of a good assessment score. It tells its nine financial dimensions related to profitability and liquidity.

 

A high Piotroski score means it is a financially strong company and thus this is a significant parameter for the selection of potential multibaggers.

Criteria under Key Piotroski Score:

2. G Factor (Gordon Growth Model)

The G factor indicates how far a company's dividends would want to continue to grow and what that trend would look like moving into the future.

G Factor Importance:

A G factor higher than 5 indicates considerable dividend growth capability.

Dividends that are liked by investors and produce regular returns can find this metric helpful when spotting future stocks.

By looking at dividend growth rates and history, you can also find some companies offering not just their share capital appreciation but also passive income.

 

Steps to Identify Multibagger Stocks

Apply Financial Screening Tools With the Use of Piotroski Scores and G Factor. Once you have these conditions, narrow the list of stocks that satisfy all these to include stocks with:

Piotroski score >= 7

G factor >= 5

Further Criteria

The company is:

• Running in a growing industry.

• Having a sustainable debt-to-equity ratio.

• Providing constant revenue growth.

Interrogate the Results

Find Companies that satisfy all the above parameters and are trading at rational valuations.

Conclusion 

Identify multibagger stocks by combining positive fundamentals in the companies like Piotroski score, about seven or above, and a strong G factor of about five or more. Check the business's sector for future growth potential, debt-equity ratio assumed healthy, and hopefully, steady revenue generation. Mix and match all these with a sensible valuation for maximum-long gain potential. Apart from time and wise analysis, that kind of market volatility can be converted into an opportunity for some great investments.

 

Disclaimer: No buy or sell recommendation. No trading or investment advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.