Multibagger Stock has a Lifecycle of several Phase which are shown in Below Figure. Some of Good Example which Follow this Phase are Weizmann Forex, Graphite India, Rain Industries….
Phase – I
In this phase multibagger Stock Improve their Fundamental but Market doesn’t know due to Low Trading Volume, Low Institutional Interest in the Stock, Low analyst Coverage. In this Phase Company Market Cap is below Rs.500Crore. In the Phase-I you can buy stock at any Price for Multibagger Return in Future.
Phase – II
In this Phase Company Market Capital is more than Rs.1000Crore Broker will initiate coverage in the company, volume goes Up, Institutional Interest also generated. Valuation is reasonable but not expensive. In Phase-II best buy after sharp correction.
Phase – III
In this Phase Stock the stock price starts a vertical climb. The stock will move up on every bit of good news. Valuations become highly stretched but people continue buying the stock regardless. From this point the stock will only generate moderate returns even if it is held for the longterm. Purchases should be avoided at all costs.
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