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Saturday, April 6, 2024

Are you Investing in 5 Small Caps with 5-Bagger Potential?

Dear Reader,

On 29 May 2022, our equity analysts finalized the best investment opportunities from small cap segment which have the potential to deliver excellent returns during next 5 years. We released our Special Report - 5 Stocks - Potential 5-Baggers in 5 Years on 29th May 2022 and shared the report with our Hidden Gems and Wealth-Builder members. The objective of this report is to achieve average annualized returns of 38% each year to achieve 5X returns in period of next 5 years by investing in 5 small caps.

We are glad to inform you that our 5 potential 5-Bagger stocks (released on 29 May 2022) have delivered average returns of 217.8 percent (CAGR of 93.7 percent) compared to Sensex returns of 30.1 percent during the same period. Out of 5 stocks, Som Distilleries (439%) and Cupid (682%) have already turned multi-bagger delivering more than 5X returns within period of 2 years.

On 10 Sept 2023, we released 5 Stocks - Potential 5-Bagger Report Update and suggested our members to book profits in Som Distilleries (delivered 439% returns) and switch to another small cap stock which offers better investment opportunity for long term investors.

Later, we released the next issue of our Special Report - 5 Stocks - Potential 5-Bagger in 5 Years update on 22 Jan 2024 and shared it with active members of Hidden Gems and Wealth-Builder service.

Below is the performance update of Potential 5-Bagger Stocks in 5 Years Report (as on 21 Jan 2024).
As one more stock i.e. Cupid out of 5 stocks turned out to be almost 8-Bagger stock (delivering total returns of 682%) in a period of 20 months and looked expensive, we decided to book complete profits in Cupid and switched to another small cap stock in our report released on 22 Jan 2024, this newly added small cap company also have a similar potential like that of Som Distilleries and Cupid Ltd.

We are confident to achieve 5 times returns in period of 5 years by monitoring performance of these five small size companies and taking corrective measures in case any of them does not perform up to our expectations.

Special Report: 5 Stocks - Potential 5-Baggers in 5 Years Released on 22 Jan 2024

As we review our Potential 5-Bagger Stocks every year taking corrective actions in terms of profit booking / exit or entry into new stock, we have released our Special Report Update - 5 Stocks - Potential 5-Baggers in 5 Years on 22 Jan 2024. 

Under this report, we have reviewed these companies and guided our members which stocks can be added at current levels, we also suggested to book full profits in Cupid and to switch to another stock which offer good investment opportunity at current levels with potential to deliver 5X returns in period of 5 Years. If we find any major change in fundamentals in any of these 5 stocks which can impact their performance going forward, we will inform our members to take corrective measures.

Note: If you wish to receive our Special Report 5 Stocks : Potential 5-Baggers in 5 Years Update (released on 22 January 2024), simply subscribe to Hidden Gems or Wealth-Builder service, or any of our Hidden Gems combo packs and we will send you the report without any extra charges. Hurry! Only 1 Day Left to avail discount upto 30% under Holi Dhamaka Offer (closes on 07 April 2024).

Few important parameters which have been looked by our equity analysts while finalizing the stock selection are as under: 
  • Market leader in the business / any one segment in which the company is operating in.
  • Scalable business with significant moat (sustainable competitive advantage)
  • Prudent Management with promoters increasing their shares holding in the company 
  • Low / manageable debt on books with healthy cash flows.
  • CAGR of above 15% with increase in operating and net profit margins in last 3 / 5 years.
  • Consistent dividend payment with expected increase in dividend payouts in coming years.
  • Growing EPS, low PE ratio with increasing ROE and ROCE over last 5 years.
  • Low share holdings of Institutions (FIIs & DIIs) to get first mover advantage.
Each parameter is equally important and plays a vital role to ensure that you get healthy returns on your investment with limited downside risk in long term. One of the important key to successful investing is to pick the right business at decent valuations. Once you buy shares, you own a part of company’s business.

While determining which stocks to consider as a long term investment opportunity for generating 5-Bagger returns, we looked into below 5 value drivers:

i) Does the company offer a product or service that has broad acceptability in a large, growing market?
ii) Does the company have healthy margins, and are they sustainable over a longer period of time?
iii) Can company generate significant amounts of cash without resorting to expensive debt?
iv) Can company return the cash generated to its shareholders by declaring generous dividends?
v) Is the company’s management honest and competent, with hunger to grow business at a faster pace?

We at Saral Gyan recommend good businesses to buy with long term view and any change in our stock views will be based on strong structural trend and not on any short term movement.

If you have patience and want to add extra power in your portfolio, start investing some portion of your savings in fundamentally strong micro, small and mid cap companies - Nano Champs, Hidden Gems and Value PicksMoreover, if you have invested in stocks and believe that your investments are not performing well, subscribe to our Wealth-Builder service and get your portfolio reviewed by us. We will review fundamentals of the companies you are holding and guide you which stocks to hold and which to exit. We will also review your equity investments across sectors and companies to ensure that your portfolio allocation is right and outperforms major indices giving you better returns in medium to long term.

Do write to us at info@saralgyan.in in case of any queries, we will be delighted to assist you.

Regards,
Team - Saral Gyan