There is a saying in stock markets that if you want to make your broker rich, go for Intraday Trading/Short Term Investing and if you want to make yourself rich, go for long term investing in Quality Multibagger stocks. If you came into Stock Markets to make wealth, it can be made only through long term Value Investing/Fundamental investing in Small Cap Stocks & Mid Cap Stocks. Intraday traders/Short Term investors are like those who are picking pennies in front of a Road-Roller. They will make few Rupees here and there for some time, And then one day Road-Roller will come and Steamroll all of them in one go.
Characteristic of Multibagger Stocks
A company that satisfies three of these rules has much less potential to become a multibagger.
The four rules are:
The first rule seeks to identify companies able to generate consistently higher returns on their shareholders' equity going forward. The idea is the more profitable the company gets, the more value it will create.
The second rule seeks companies with minimal debt. The idea here is to look for businesses consistently reducing their external loans and borrowings.
Profitable with low capex scheduled
The third rule looks for companies that have already done the hard work of building plants and machinery for future growth. They are now in a ripe phase to benefit from their efforts.
The fourth rule seeks businesses that are 'out of favour', where the markets are taking a dim and depressed - yet incorrect - view of the future of the stock.