To earn huge wealth from high growth stocks in the long run. Several leading global Institutions have projected the Indian economy to be the fastest-growing in this decade. Thus many companies are likely to deliver mega returns in times to come. The intention is to identify those high growth companies with passionate quality management and invest periodically when they offer the highest VALUE.
In the long term, the majority of Mutual Funds are unable to outperform their benchmark indices. Apart from high operative expenses (about 2% per annum) these funds are heavily diversified and lack concentration (most Mutual Funds have upward of 40 stocks). To further add to their woes often investors act irrationally and Fund Manager is literally forced to buy and sell stocks at the wrong times.
Whereas periodic investment in about 15 select high growth stocks can deliver much better returns with reasonably good safety of capital, as amply demonstrated in this product since the start.
Over the past few years, many growth stocks have given eye popping returns. For example, share price of HDFC Limited has grown from Rs 42.80 as on 13 Sep '02 (adjusted for 5 for 1 stock split) to Rs 2205 as on 28 June 2019, gains of 5274% during last 16.7 years! There are scores of such growth stories like Infosys, MRF, Wipro, Eicher Motors, Maruti Suzuki, Bajaj Finance, HDFC Bank and Page Industries etc.
It is the consistency with which the companies' Earnings Per Share (EPS) grows which makes them mega baggers. Investors are ready to buy such stocks even at high PE ratio. Thus regular investment in such stocks leads to double benefit, one from growing EPS and second from rising valuations (PE ratio) and the multiplication of these two parameters lead to magical returns.
Mathematically, Share Price = PE x EPS.
This multiplier factor works wonders.
Let's understand this multiplier phenomenon with Bajaj Finance which we identified way back in 2010.
| 1 Jun 10 | 1 Jun 11 | 1 Jun 12 | 1 Jun 13 | 1 Jun 14 | 1 Jun 15 | 1 Jun 16 | 1 Jun 17 | 1 Jun 18 | 1 Jun 19 | |
|---|---|---|---|---|---|---|---|---|---|---|
| EPS (A) | 2.44 | 6.74 | 11.08 | 13.56 | 14.47 | 17.99 | 24.23 | 24.23 | 47.05 | 66.95 |
| PE Ratio (B) | 19 | 9 | 8 | 11 | 14 | 24 | 32 | 32 | 44 | 52 |
| Price = AxB | 46.36 | 60.66 | 88.64 | 149.16 | 202.58 | 431.76 | 775.36 | 775.36 | 2070.20 | 3469.70 |
Price adjusted for Bonus / Stock Split.
As the first row in the above table depicts that the EPS gained steadily during these 9 years and investor confidence too gained momentum in the form of higher PE ratio. It is this multiplier effect (Share Price = EPS x PE) which resulted in price multiplication by 75 times in just 9 years!
Like Bajaj Finance our research team has identified several such opportunities at pretty early stages and subscriber investors have benefited immensely. Apart from key financial parameters, it is the passionate management that plays a very crucial role in expanding operations, facing competition, adopting new technology and tackling volatile business conditions at national as well as international levels.
This product was started on 5 Oct 2016. The performance so far is pretty encouraging considering the strong emphasis on the safety of capital and inclusion of Small and Midcaps.
If you liked this product, you might also want to read Smart Multibaggers.
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