Over the past five years (2017-2022), the average price movement of Indonesian stocks based on the movement of the Jakarta Composite Index has increased by 18%-19%. If you had stocks worth Rs. 100,000 in 2017, the present value of those stocks would be around Rs. 119,000.
Even though it looks unusual But there are some stocks that in the last 1-5 years the price can go up 5-10 times. If you bought this stock in 2017 at Rs 100,000, now its value is Rs 500,000. Isn’t that good?
These stocks are known as multi-bag stocks. in the following article The author will discuss several stocks of this bag and how to find them. Continue reading until the end.
Understanding multi-bag stocks
A bag of stocks are stocks that have increased in price 5-10 times over the last 1-5 years. The term was first used by prominent investor Peter Lynch in his book One Up on Wall Street in 1989
different from fried basilStocks like this generally have strong fundamentals and a promising business, so price growth will continue up to 5 years after you buy regardless of the short-term price fluctuations during that time.
The simplest example of multiple bags is PT owned Sumber Alfaria Trijaya Tbk (AMRT), or Alfamart, according to Google. The retail company’s shares opened at Rp 40 per share in 2009. In 2014, the company’s share price increased. It rose above Rp 400 per share. Now, 13 years after the IPO, AMRT has sold over Rp 2,300 per share, up 5,800%. This means that if you bought 10 lots of AMRT in 2009 for Rs 40,000. Year You can sell it for Rs 230,000 and make a profit of Rs 190,000.
How to find multiple bags of stock
High-risk, high-reward In addition to the high return of many bags of stocks, there is also a risk. One of the risks is You need enough time, energy, and analysis to find stocks that have the potential to become multiple bag holders. So how can I find it? Here are some criteria that must be met when redeeming these types of securities:
1. Bright business opportunity
Companies that can provide investors with many advantages are those with promising business prospects. Because without bright business opportunities and innovating continuously over the next few years. Of course, the company will not survive in the midst of economic, industrial and competitive changes.
To determine whether the company has a bright business prospect or not. Investors need to keep an open mind and diligently read the latest economic news and research on economic conditions. Investors need to ensure that the company continues to innovate to face the changing times.
2. Company debt in an appropriate condition
Debt is inevitable during economic growth. On the one hand, debt financing helps companies Success in projects and operations, but vice versa. The accumulated debt can also be a financial burden on the company. because in the end Principal and interest debt still need to be repaid, so debt must be managed as wisely as possible.
There are several financial metrics that you can use to check. “The level of fairness of this debt” such as Debt to Equity Ratio (der) and Debt to Asset Ratio (dar)Each company has different DER and DAR values, so be sure to analyze the condition of this debt over several years and compare the condition of the company’s debt with other companies. working in a similar field
3. Strong fundamental conditions
In addition to debt There are also other financial components. There are many more that determine the quality of a company’s underlying conditions such as costs, revenues, assets, etc. Of course, good debt doesn’t mean much to a company that can’t balance revenue and operating expenses. can Therefore, the company will continue to lose money.
Ensure that the company’s finances and business as a whole are in good health and sustainable If you want to invest in this company for the long term Because just like the foundation and root Strong fundamentals will keep the company strong even with strong winds.
4. The Company’s performance continues to grow.
A good company is not one that makes a huge profit in a year or two. Good company for investors A profitable company continues to grow even if it is not important and even if it loses. But losses have only occurred once or twice in recent years.
This steady growth shows that the company’s operations are able to adapt to changing economic conditions and ongoing business trends. As a result, the company can still maintain a good financial position under any circumstances.
5. Choose stocks that are undervalued.
Undervalued stocks are stocks that are priced lower than you think they should be for. Determine the fair price of the stockYou should consider the above 4 aspects first.
Buying undervalued stocks is like buying stocks that are underestimated by other investors in the market. As a result, when investors begin to see the true value. The share price tends to rise.
Even the name is inferior But that doesn’t mean you have to buy. share value. can also buy growth stock which you think the price can still go up So in the long run you can benefit.
Difference Between Multi-Bag Stock and Fried Stock
If you prefer to use multiple bags of stock Avoid frying oil. Although both have the potential to make huge profits. But there are several differences, namely:
- The stock price growth was also supported by good fundamentals. While fried stocks are not supported.
- Short-term growth of many bags of stocks may be small, but consistent, while the stock price rally can be decisive. But the price hike is only temporary.
- The rise in multibagger’s share price was driven by favorable business and economic conditions for the company. Like the company’s innovations, the rise in fried food prices, on the other hand, was caused by some people who wanted to raise prices and take advantage of the increases.
Finding multiple bags of stock is not an easy task. It takes perseverance and diligence in analyzing the fundamental conditions of the company and patience to achieve maximum profit. However, this level of sacrifice is proportional to the level of profit you will earn in the future.
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