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CEO.CA members discuss high-risk penny stocks which can lose their entire value. Only risk what you can afford to lose.
anonymousChris Mayer's Hallmarks of Hundred Baggers, by @racker@racker/seven-things-you-should-know-about-finding-100x-investments-on-the-stock-market
1. Start with small companies. The median sales figure in his study was $170 million.
2. Hold for a long time (the average 100 bagger takes over 16 years to happen), which is really hard. Being quoted a price every day by the stock market, and all the crazy stuff that goes on in the world, makes it very hard to hold on. If you just followed the business it would be easier.
3. Lower multiples preferred. Earnings and multiple grew over time. But, pay up for growth if you’re right.
4. High returns on capital are really important. It has to have a great underlying business.
5. Owner operated businesses are preferred.
6. Reinvestment is the most critical ingredient in success, once you have identified an outstanding business.
7. It can be a roller coaster ride and plane boring to own these companies for the long term.