This is an
analysis of past 100-bagger stocks. A 100-bagger is a stock which increases in
value 100 fold (i.e., a stock which goes
from $1 to $100). The term "bagger" was popularized by Peter Lynch, the former fund manager of Fidelity
Magellan. He actually spoke most often of 10- baggers, however I figured
that looking at 100-baggers would be more fun. By looking back I hoped to
discover some common characteristics which would aid me in identifying
potential multi-baggers of the future. Of
course all my analysis is grounded in the fundamentals of companies.
However once I find those stocks with the fundamentals I like, it was my hope
that this exercise would help me to
understand better why some stocks appear to go nowhere despite solid
fundamentals while others make dizzying advances, how long those moves can
last, when to enter and when to exit, etc.
I will be including lots of charts so I should describe their format. I
make my own charts because I want to see certain things on them not normally
present on stock charts (such as earnings lines,
growth rates, and PEG ratios). Below is the chart of NTRI, a 100-bagger I will
go over in more detail later.
In
blue is the adjusted closing share price (adjusted for stock splits). The pink
through dark red step function lines are the trailing twelve month EPS times
various multiples (see the legend on the right). All EPS figures have also been
adjusted for any stock splits. These lines, like the closing price, are read on the left-hand scale. The green step function
lines are the year over year percentage change in quarterly EPS (green
dotted line) and ttm EPS (green dashed line). (more)
