The aim is to accumulate a large fortune through investing in high-growth stocks in the long term. Notable global institutions have forecasted that the Indian economy will experience the fastest growth in the next decade, potentially leading to significant gains for various companies. The plan is to recognize these high-performing companies with dedicated and capable management and to make investments when they provide the maximum value.
Over the long term, most mutual funds are not able to outperform their benchmark indices due to several factors, such as high operational costs (around 2% per year) and a lack of concentration caused by heavy diversification (most mutual funds hold more than 40 stocks). Additionally, irrational behavior on the part of investors can result in fund managers making incorrect buying and selling decisions.
In contrast, investing periodically in a carefully selected group of 15 high-growth stocks has produced superior returns with a reasonable level of safety for the capital, as Smart SIP has demonstrated since its inception.
In recent years, many growth stocks have provided spectacular returns. For instance, the share price of HDFC Bank Limited has increased from Rs 21.55 on January 3, 2003 (adjusted for split/bonus, etc.) to Rs 1639 on January 3, 2023, resulting in gains of 7505% over the last 20 years. There are many similar success stories, including Infosys, MRF, Eicher Motors, Maruti Suzuki, Bajaj Finance, HDFC Bank, and Page Industries.
The consistently high growth of a company's Earnings Per Share (EPS) makes these stocks mega-performers. As a result, investors are willing to purchase such stocks even at high price-to-earnings (PE) ratios, which leads to two benefits. Firstly, the growing EPS and, secondly, the increasing valuation (PE ratio). The combination of these two parameters results in exceptional returns.
Mathematically, Share Price = PE x EPS.
This multiplier factor works wonders.
For example, to understand this multiplier phenomenon, let's consider Bajaj Finance, which we identified 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 shown in the table, the EPS of Bajaj Finance grew steadily over 9 years while investor confidence increased, reflected in a higher PE ratio. This multiplier effect (Share Price = EPS x PE) led to a 75-fold increase in the stock price over just 9 years.
Similarly, our research team has identified several such opportunities at an early stage, providing substantial benefits to subscriber investors. In addition to financial metrics, a company's management is critical in driving growth through expanding operations, competing effectively, adopting new technologies, and navigating challenging business conditions domestically and globally.
The Smart SIP product was launched on October 5th, 2016, and has seen promising results thus far. The product places a strong emphasis on capital safety.
If you liked this product, you might also want to read Smart Multibaggers.
His command over managing Stocks in a portfolio is par excellent.
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Surprisingly simple yet powerful recommendations.
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By far the most competent investment advisor I have come across.
Congratulations on 22 years of Smart Gains. Following it for more than 17 years and still keep a lookout for it every Wednesday morning.
Hats off to your vision and pro-activeness.
I have been investing in Equity since 2005. But the peace of mind is at a peak after associating with you.
