2024 multibaggers
Multibaggers are stocks that have multiplied their initial investment several times over, turning early investors into success stories. Think about companies like Amazon, Microsoft, and Apple, whose stocks have seen incredible growth over the years. It’s easy to see why finding a multibagger appeals to many investors.
Finding multibaggers can be easier than holding onto them, as they usually require several years to reach their full potential, and early investors might be tempted to cash out too early, or panic during market downturns. This is why constantly updating valuations are extremely useful.
Companies like Apple, Microsoft or Amazon have rewarded investors with incredible returns, provided they held on to their stock for the long-run.
Methodology
To come up with our list of multibaggers, we’re doing both a qualitative and quantitative analysis. Both of these are equally important, as we want to buy quality companies that can stand the test of time, at the right price.
Finding potential multibaggers
We can use the pevaluator “Discover” functionality to find potential multibaggers. Based on our defined market model, this will show us a number of undervalued stocks. We can also look at the “Growth small caps” or “52w lows” section to find companies with upside potential.
Note that every user will get a different set of recommendations based on their own market model. The examples below are based on a model that looks at ROIC, Revenue and EPS growth, change in no. of shares outstanding, balance sheet and debt/FCF.
What to look for?
The most important metric when trying to find multibaggers is probably Return on Invested Capital. This metric is so important, that it’s the primary quality indicator for the most successful investors out there. Another thing to look for is future prospects, in terms of expected revenue, FCF and EPS growth.
The following companies could be multi-baggers, but either their return on invested capital is lower than their peers or their growth prospects are lower than what we’re looking for in a multibagger:
$DIS - massive moat, high return on capital. Undervalued, so potential is definitely there. Revenue though is expected to be fairly flat. Full valuation here.
$BABA - you either love the stock or you hate it. All fundamentals look great, but there’s always that inherent risk associated with it, which keeps investors away. Valuation is attractive, but revenues and earnings expected to be flat.
$QCOM - quality company with a very wide moat, but lower return on invested capital and growth than we’d want from a multibagger.
Other examples that have potential but for various reasons didn’t make our final list: $CROX, $F, $CTSH, $VNT, $GM, $AN
Does valuation matter?
Always. You can overpay, quite easily, for a good thing. One can be bullish on the company, and believe it is over-valued, at the same time. This isn’t to say we’re excluding companies that are fairly priced alltogether - it’s just stating the obvious - we have a better chance of doubling our money if we buy at half the price.
Can large companies like Microsoft, Amazon or Adobe still be multibaggers? Definitely - they have massive growth prospects, return on invested capital, all have extremely wide economic moats - however based on our model they are priced to perfection. Defining your own model on pevaluator, or using a different valuation model, one could potentially come up with higher estimates that make sense.
Our top 10 multibaggers for 2024!
Every investment comes with risk. As value investors, we want to minimize risk and maximize profit. Thorough research is needed before making any investment decision. Don’t buy a stock just because a random person on the internet tells you it’s undervalued. The following is a list of potentially undervalued companies, based on a custom market model - you can create your own model and valuations using pevaluator, for free.
The underdogs - undervalued smaller-caps with high expected growth.
Lovesac (1/10)
A cool furniture company known for its modular designs.
Malibu Boats (2/10)
Manufacturers of high-performance boats, perfectly positioned to benefit from the growing interest in recreational boating.
First Solar (3/10)
A pioneering force in solar energy solutions, set to shine in the renewable energy sector.
Value plays - solid companies trading at a discount
PayPal (4/10)
The go-to global online payment giant, making financial transactions secure and seamless. PayPal is trusted by customers, but is currently getting little love in the market.
Skyworks Solutions (5/10)
A semiconductor manufacturer offering connectivity solutions, especially in the exciting realm of 5G technology.
Starbucks (6/10)
The globally loved coffeehouse chain with a strong brand, poised for potential international expansion.
Domain leaders perfectly positioned for massive growth
Note - 3 of these are up big since 1y ago - does this mean one shouldn’t invest in them? Absolutely not. As their price went up, so has their target valuation, so there might still be massive upside there.
Broadcom (7/10)
Global technology company that designs and develops a broad range of semiconductor and infrastructure software solutions, specializing in connectivity, broadband, and wireless technologies.
ON Semiconductor (8/10)
A tech-savvy semiconductor company specializing in power management and sensors, navigating the dynamic tech landscape.
Alphabet/Google (9/10)
The parent company of Google, spanning diverse sectors like search, advertising, cloud, and cutting-edge technologies.
Nvidia (10/10)
A trailblazer in graphics processing units (GPUs) and artificial intelligence, leading the charge in various tech-driven sectors.
Do you agree with our list? Tell us what you think on twitter, or follow us for more lists.
Join pevaluator today for free and create your own model, find investment ideas, and access fair price estimates for thousands of stocks.