How to find companies that can give return of 100 times. Key points discussed here are covered in the book “100 Bagger” by Christopher Mayer
- Look for smaller companies in the $ one billion market cap size. It is much difficult for large companies to grow hundred times. Example – Bajaj Finance Limited grew more than 100 times from 2005 to 2025. A company to grow 100 times in 20 years must grow at 26% CAGR
- Benefit of Twin engine growth
a. company sales growth greater than 15% for a long period of time and this growth results in bottom line/ earnings growth
b. Increase in PE multiples – a company with 15 PE gets a 30 PE in the future due to reliable earnings growth - Look for owner operators – The management makes the biggest difference in future growth. We have to find the owner with skin in the game and become a partner.
- The coffee-can portfolio – Use good filters like sales growth, profit growth, ROCE and RoE. Company should be a leader in the category and have a moat. Buy and hold this portfolio of 10 stocks for 10 years +
Remember what Warren Buffett said “the stock market is a device for transferring money from the impatient to the patient” - Ignore the Macro analysts
In the long run it does not matter what the fed is doing where the interest rates are going and inflation keeps going up and down. Elections, government change president come and go etc.
Happy Investing. Buy right, sit tight.
