Multi-Bagger Stock Picks: Tips and Tricks for Finding BIG Winners!
Are you looking for multi-bagger stock picks? Do you want stock trade ideas that will double, triple or even quadruple in price? Well, then you’ve come to the right spot!
While picking multi-bag stocks isn’t always easy, it can be an incredibly effective way to grow your capital and net worth over time.
So in this detailed article, I’m going to show you everything I know about finding the elusive multi-baggers.
That means, by the time you’re done reading this article you’ll have a much better idea of where to look for multi-bag stock trade ideas. I’ll even show you some of the EXACT stock screens and steps I use to find these high-value ideas for myself.
Plus, since this article is over 3,000 words long I appreciate you might want some time to dig into it. So to make it easier for you, you can also download this post as a PDF-QuickStart Guide here.
And by the way, I’ve tried to write all this in an educational way so you’ll really strengthen your grasp on some very important trading concepts to help you hunt and bag BIG growth stocks. Sound good?
Great. So before we get started then, let me give you a little more background info on why multi-bag stock picks are worth your attention.
Why Look For MultiBagger Stock Picks?
First things first: In case you aren’t familiar, multi-bag(ger) stock ideas are those that more than double in price. We’re talking 3x, 4x, or even 10x in value!
So it stands to reason…
If you’re doing any kind of stock trading or investing, multi-bag stock picks are probably exactly the kind of stocks you want to hold in your portfolio.
Because (at the risk of sounding obvious), a stock that goes up over 500% in a year or two, is probably a stock you want to own!
… am I right?
And so, now I want to show you how you can try to find these explosive trade ideas too! But before I reveal all my trading secrets, I know what you might be thinking.
Is It Actually Possible To Find MultiBagger Stock Trades?
One of the craziest things about multi-bagger stock picks is just how common these ideas actually are!
And I know: At first glance you might not think very many companies can watch their shares go up in price by over 200.
I get it.
But it happens more often than you’d think!
And in fact, there are many multi-bag stock picks hiding in plain sight, right now. Just consider some of the popular stocks out there today: FB, NFLX and AMZN, all of which have doubled their price (or more!) in the last ten years.
Facebook is probably the poster child though. Because while it’s hard to believe FB has already been public for over 6 years, the share price performance has been even more astounding.
Because as you can see below, from a post-IPO low of around $18, FB has climbed higher and higher.
Around the time of writing this post, FB is trading around $190 per share. This >10x growth is exactly what you want to look for in a potential multi-bag pick.
So I wanted to point this out because a lot of people think you can’t make multi-bag returns from well-known companies. But this is demonstrably not true. Just look at FB!
Now… as you might already know…
Another approach to finding multi-bag trade ideas is to look for penny-stock companies (often trading for a fraction of a penny). Of course, if these super low share prices advance in any meaningful way, it’s certainly possible to multiply your money.
That said, while small cap stock picks can be a useful place to look for multi-baggers, I’m not quite as keen on using penny stocks for this approach.
The reason is…
Even though all investments come with the risk of loss, I think a complete wipeout or significant drawdown is much more common for those trying to flip penny stocks over quick holding periods.
And believe me, I understand the allure of big gains in a short time frame. But markets are pretty efficient overall, which means at the end of the day these potential lottery tickets are likely to expire worthless.
These small OTC-traded stocks don’t usually have the same kind of liquidity as those listed on major exchanges. So even if you do have a multi-bag penny stock winner, you might have trouble selling at a profit. And that hurts!
So because of all this… as you might have guessed… I personally tend to prefer more liquid shares on major exchanges with at least a couple hundred million in market cap when I’m multi-bag hunting.
Now let’s get down to the business of looking for these multi-bag ideas!
And after that, I’ll even show you some other tips for how to more effectively manage these trades once you find them.
But first things first…
Two Simple Strategies to Scan For MultiBag Stock Picks:
Now that we’ve laid some groundwork around why multi-bagger stock picks are worth looking for, I want to show you two very simple strategies you can use today.
So by the time you’re done reading this section, you’ll be one big step closer to scanning for potential multi-bag winners for yourself!
Now remember, I just mentioned some multi-bag trade ideas are hiding in plain sight. And that’s actually the key to my first multi-bagger stock scan.
But I’ve got to warn you, this approach is deceptively simple. Are you ready?
Multi-bagger Scanning Strategy #1: Winners Keep Winning
In a lot of ways, we’re really lucky to be trading in this modern era. Just think about it…
Transaction costs have gone down to nearly zero, the internet provides countless tools and points of view, and you can manage your portfolio from anywhere given the proliferation of mobile brokerage apps.
… but you know what?
I think there’s a case to be made that all this access can also be a disadvantage.
Because our attention spans are short, we overweight tick-by-tick data and try to micromanage our positions. We over-trade and leave the big money on the table.
It’s penny wise and pound foolish!
And it’s exactly why the stock scan I’m about to show you is worth considering (even though it’s so simple).
So here it is:
- Head over to FinViz.com/screener.ashx
- On the default tab put a minimum average volume filter (like 100K)
- Go to the technical tab of the screener and select 1-year performance > 50%
- Sorry by charts, volume, or however you like.
Now to make this easier for you…
- Here’s a link to the stock screen above
- And below is a screenshot to help you see what I mean
Now I know you might think this is too basic. But hear me out. Because…
If you want a stock that’s going to go up 500%, well, it needs to go up 50% first, doesn’t it?
Of course it does! This is just a basic mathematical fact!
It’s so simple. Yet, it’s also very robust.
And in markets increasingly dominated by passive market-cap weighted index strategies, I think this line of thinking is still worth paying attention to.
So I know it sounds silly. I know it can be hard to buy stocks that have already gone up. But more often than not, these are the ones that keep going up!
The question is, are you willing to try and hitch a ride?
Of course to be clear, you’re welcome to add on additional screening criteria depending on your style preferences and goals. But overall…
I think opportunity really is hiding in plain sight; meanwhile, active traders jump from one idea to the next multiple times per day.
On the other hand, if you can own winning stocks and then sit back patiently, you’re likely to be much better off than many others! Plus, you save on the very real costs of commissions and slippage.
Now…if you’re still feeling unsure (or would like another approach that doesn’t rely solely on price action)… then don’t worry. I’ve got you covered.
Multi-bagger Scanning Strategy #2: Explosive Growth
While I’m happy to let price action be my guide, I understand this can be tough. Sometimes it feels good to wrap our trading plans in a narrative. But lucky for us… once again, FinViz makes this easy!
So let me paint you a picture…
Because in addition to the large-cap multi-baggers hiding in plain sight, there’s another class of stock that might be of interest to you.
I call these ones explosive-growth small float breakouts!
And more or less, these ideas are just what they sound like: companies with a lower number of shares outstanding, and big top-line growth.
Often, these are small or mid-cap companies that have found great product-market fit and are really starting to fire on all cylinders.
Typically, here’s what I screen for:
- Average volume > 100k
- New 52-week high
- Quarter-over-quarter sales growth > 30%
Once again, here’s a link to this screen so you can see it in action. Feel free to bookmark that page so you can check back any time.
Then the next thing I like to do is go to the “Ownership” tab of the screen results, and sort by the size of float, in ascending order.
Here’s what it looks like:
The goal of this scan is to focus on stocks with limited supply for investors, but huge demand from end customers. This sweet spot can really help you zoom in on tickers with multibag potential.
By the way…
If you’re familiar with CANSLIM-style analysis these strategies might sound familiar to you. In my personal experience over the years, these ideas have worked well for hunting potential multi-bag trades.
To help you get the most of this though, I also created a short video to walk you through the ideas above. So if you’re more of a visual learner, hopepfully you’ll find this helpful!
FinViz Tips For Multi-Bag Stock Pick Scanning [VIDEO]:
So there you have it! Now all that said, successfully profiting from multibag stock picks requires more than just pressing the buy button.
So let me share some tips to help you try and maximize returns once you’ve got skin in the game.
Tips for Trading Multibagger Stocks More Effectively:
You know what’s weird? There’s SO much information available online about trading indicators and entry signals. But then…
When you start getting into the details of trade management (and what happens after you press the buy button), things suddenly get a lot more quiet.
But don’t worry. I won’t leave you hanging! Instead, I’m excited to share some of the most impactful trading concepts that have helped me ride BIG trends to capitalize on multi-bag ideas.
So for starters…
— Really think about what it means to own a multi-bagger stock pick.
More specifically, go look at charts of previous multi-bagger stocks and see what they look like. Notice that it usually takes months, quarters or years for a stock to go up +200%. Are you willing to hold on this long? Or do you tend to sell too early to “lock in” your gains? Think carefully about how you want to proceed because when trading multi-baggers, you could go broke taking a profit (or at least, leave a LOT of money on the table)!
— Ignore the news.
As an addendum to the above: If you’re trying to ride big stock trends you need to let your account ebb and flow a bit. You can’t time every small tick. So once you’ve taken a position, it’s often easier to step back and just let your system do it’s thing.
A big part of this is ignoring the news headlines. Because eventually, this kind of explosive uptrend will attract news headlines and opinion articles.
And I’ve found it to be much less emotionally taxing if you focus on price action and stop worrying about the myriad opinions about how overvalued XYZ stock is.
— Overlaying macro trends can help validate ideas.
If you do have trouble ignoring the news (and let’s be honest, we all love a good narrative), try to separate opinions from facts. One strategy here is to zoom out to the big picture and remind yourself of the macro trends driving our world. Things like demographics, automation, and artificial intelligence will likely drive multi-bag stock picks for the next few decades at least.
To the extent existing companies can leverage these trends to generate value, the more likely they are to see their share price multiply. Try to remind yourself of these bigger trends when you see a hot take while browsing your daily news feed.
— Have a regret-minimization strategy (and an exit plan!)
it’s always important to know when to sell your stocks. But if you’re hunting for multi-baggers, there’s also a risk of getting out too early.
So while I always advocate having an exit plan before you enter a trade, in this case you also want to minimize the regret that comes with riding a winner. That’s why I encourage you to reflect on your own personality and experience to determine what kind of things you’ll regret, and then plan against it.
For example, if you worry about big drawdowns and giving back open gains, then consider selling a small piece of your position every time it goes up 50%. On the other hand, if you don’t want to sell too early then consider a trailing stop loss.
The specific strategies you use will depend on your own preferences. But the idea is you’ll better be able to stick with your multi-bag trading plan if it’s adapted to your personal psychology.
Now, I know this section was a little bit of a detour. But by spending some time thinking about your strategy ahead of time, you’ll be less likely to make impulsive mistakes in the heat of the moment.
Speaking of expensive multi-bag trading errors…
MultiBagger Trading Mistakes: What Not To Do
Every trading strategy has its pros and cons. And multi-bagger stock picks are no exception. So…
In this final section, I just want to share a few more actionable ideas that can really help you make smarter multi-bagger trading decisions.
— Don’t sell too early!
This is the cardinal sin of multi-bag stock trading. People tell me they want to catch BIG market moves, and then they panic as soon as the trade starts to pullback. Or even worse, they cash out with a small 5% gain and pat themselves on the back!
But the truth of the matter is…
Multi-bag stock picks need time to appreciate in price. Since markets are pretty efficient, you don’t usually just see stocks doubling or tripling overnight. It doesn’t happen. These things take time. And if you sell too early, you’ll end up missing out.
Of course to be clear, I always use a stop-loss and define my exit plan before I buy. And I do sometimes get stopped out early if there is a violent shakeout or reversal.
But on the other hand, I don’t micromanage my positions and I’m willing to give back a big portion of open profits in exchange for a potential multi bagger.
— Don’t have blind faith!
Now the flip side of the previous point is, while you do want to give your stocks some wiggle room, you don’t want to turn a blind eye either.
I think this is especially true for any “story stocks” you’re investing in. You need to try and remain objective to determine whether setbacks are just a bump in the road on the way to greatness, or signs of something more sinister.
Remember, not all the multi-bag bets you place are going to work out. In the real world, things do go wrong and potential can fail to pan out. So determine a process for periodically re-evaluating your thesis.
This is also why I like to use technical analysis to place my stop loss (because it takes some of the guess work out).
Now to be honest…
Balancing blind faith vs. selling too soon is easier said than done. But at least by being aware of this dichotomy you can start to manage it.
— Avoid the temptation to pick bottoms!
One point of frustration for a lot of new traders is tying up money in downtrending stocks. Because while I understand you want something cheap (or good value), this is an excruciating way to trade. Not only are you likely to face losses, but there’s often no end in sight for stocks that have been bleeding out over the long term.
The simple truth is, turnarounds can take much longer than you think! So that’s why I prefer to focus on explosive growers already making 52-week highs.
The goal with multibag stock ideas is to catch HUGE profits. I’m looking for stocks that can go up over 100%. So it doesn’t bother me if I miss out on the first 20 points of a move!
… Make sense? Great.
Now if you do still insist on trying to pick the bottom, consider building your positions slowly over time. There’s no need to rush in all at once.
— Ignoring technical and fundamental trends!
One of the pillars of my approach to stock analysis is using a blend of technical and fundamental analysis. I think this kind of approach is especially helpful when considering multi baggers.
That’s because watching how fundamental results evolve over time, and how they relate to the stock price trend, can be very insightful for long-term investors.
For instance, if I know operating results have been consistently improving over time, I’m more comfortable using a wider stop loss and giving back some open profits, in order to let the trade ebb and flow.
… And you know what the best part is?
With all the great free tools available today, fundamental analysis is actually easier than ever. So if you’re not sure where to get started, check out this free blog post on a fast and easy way to get started with fundamentals.
— Don’t put all your eggs in one basket!
The last large mistake I often see (and which we touched on earlier) is when traders go “all in” on a given stock idea. And yes I know it can be exciting to pound the table with conviction. But that’s usually not the most prudent step.
Because over time, you will have losing trades. It’s just simple math. So you need to ensure a bad losing streak won’t wipe you out. If you aren’t familiar, I strongly encourage you to brush up on your position sizing best practice before taking any big swings in multi-leg ideas.
At the end of the day, you don’t need to predict stock prices to win. But you do need to manage positions carefully by balancing risk with meaningful stakes..
Now we’ve really covered a lot of ground in this article. And I hope you’re feeling more confident about the potential of multibag stock picks.
To help you get the most of this though, let’s just quickly recap some of the key points to remember for multi bag stock picks.
Multi-Bag Trading Conclusions and Next Steps:
Overall, I want to impress on you that multi-bag stock picking is possible. It’s not always easy, and many ideas will fail to launch. But if you’re diligent and persistent you should be able to bag some of these big ideas for yourself!
For me, the big difference maker was zooming out to trade from weekly charts. This helped me hang on for the ride without micromanaging my trading positions and selling too soon.
The other thing that really helped me move the needle was to focus on stocks that are already going up. Trend following the momentum created by other traders (instead of trying to figure out the next great idea and pick the exact bottom) is an easy and effective way to look for multi-bag ideas.
Finally, I spend quite a bit of time each week looking for my own multi-bag stock picks. So if you want some free ideas to supplement your own multibagger research, just write your email in the form below!