How to find the market’s “multi-bagger” stocks

The success of major indices is based on a handful of spectacular performers. Dr Mike Tubbs outlines the key characteristics of shares capable of rising tenfold or more – and suggests where to start looking

Operating theatre
Shares in Intuitive Surgical, America’s top robotic-surgery group, rose 18-fold between 2009 and 2018
(Image credit: © Intuitive Surgical)

All investors dream of finding stocks that rise tenfold or even 20-fold. These “ten-baggers” and “20-baggers” typically produce their spectacular gains over a period of five to 15 years. The term ten-bagger was coined by Peter Lynch, who managed the Magellan Fund from 1977 to 1990. Over this period his fund turned a $1,000 investment into $28,000.

To achieve this excellent performance, he invested in many companies whose share prices grew by between ten and 30 times – or more – during that 13-year period. Multi-baggers needn’t produce their stellar gains immediately. Lynch cites WalMart as an example of a company that went public in 1970 and went on to appreciate 30-fold after 1980.

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Dr Mike Tubbs

Highly qualified (BSc PhD CPhys FInstP MIoD) expert in R&D management, business improvement and investment analysis, Dr Mike Tubbs worked for decades on the 'inside' of corporate giants such as Xerox, Battelle and Lucas. Working in the research and development departments, he learnt what became the key to his investing; knowledge which gave him a unique perspective on the stock markets.

Dr Tubbs went on to create the R&D Scorecard which was presented annually to the Department of Trade & Industry and the European Commission. It was a guide for European businesses on how to improve prospects using correctly applied research and development. He has been a contributor to MoneyWeek for many years, with a particular focus on R&D-driven growth companies.