Legendary American investor Peter Lynch popularised the concept of tenbaggers, helping investors find stocks that could deliver more than 1,000% returns in the long run. While his search was mostly limited to Wall Street, Indian investors may not have to search far from home.
The Indian stock market has seen sharp upswings and downswings over the past five years, including a record bull run followed by a sharp consolidation. Benchmark index Nifty 50 has overall delivered 46% returns over five years, while Sensex gained 38%. Over the past one year, Dalal Street has seen strong downturns amid AI worries, rising oil prices and Middle East tensions, along with other factors.
However, some stocks continued to deliver stellar returns to its shareholders, proving that Peter Lynch’s tenbaggers not only exist on Wall Street but also ride the bulls of Dalal Street.
GE Vernova T&D is the top gainer on the Nifty 500 index, skyrocketing a whopping 3,013% over the past five years. From a mere Rs 134 apiece market price at which the stock was trading in August, 2021, the stock has soared multifold to the current level around Rs 4,180 apiece.
BSE shares followed, rallying 2,686% over the past five years. Apar Industries, TARIL, Zen Technologies and Mazagon Dock Shipbuilders shares also recorded over 2,000% gains over the past five years.
Welspun Corp, PG Electroplast, Hitachi Energy, Cemindia Projects, Neuland Laboratories, Himadri Speciality Chemical, HBL Engineering, Chennai Petroleum Corporation, GRSE, Force Motors, Adani Power, Solar Industries and MCX shares were the other tenbaggers, rising 1,000% to 2,000% over the past five years to deliver stellar returns to their shareholders.
While tenbagger returns seem tempting, it is important to remember that only those shareholders who bought these stocks several years back are now sitting on such heavy returns. While such headlines often grab attention, such tenbagger returns for new investors buying the stocks now is not guaranteed.
Also read | Multibagger stocks: Ather Energy, Hind Copper, MCX among stocks which surged up to 250% in one year
Where can you find the next tenbagger?
If you missed the rally and are looking for opportunities to find the next tenbagger, remember what Peter Lynch, the one who popularised the concept, once said. He urged investors to notice products and brands people love and use everyday. He believed in the principle of buying what you know.
During his tenure as Magellan’s portfolio manager, Lynch bought more than a hundred '10 bagger' stocks, including Fannie Mae, Ford Motor, Philip Morris International, Taco Bell, Dunkin' Donuts and General Electric.
Amid the noise, Peter Lynch advocated focusing on finding potential ‘tenbaggers’ instead of making excessive trades. As Peter Lynch puts it in his book 'One Up on Wall Street', “All you need for a lifetime of successful investing is a few big winners”.
Tenbaggers typically are not the companies everyone is already talking about. They instead are often overlooked gems that one discovers through research or personal observation. While Peter Lynch advocated for buying shares of companies that one knows well, he warned that should be done only after proper research. One should not just buy the shares of her neighbourhood restaurant or her favourite clothing brand just because she sees a long list of customers there every day.
This should only mean that the company should be added to her research list, and she should invest only after properly knowing about the company’s financials, growth prospects and more, according to Lynch.
Sharp market volatility often makes investors panic and make trades that they regret later. This is true for both buying and selling stocks that gain momentum briefly before fizzling out. According to Peter Lynch, "The key to making money in stocks is not to get scared out of them." "Markets go down, sometimes they go down a lot. If you are not ready for this, you shouldn't own stocks,” he once said.
Lynch once said an investor should make a decision with their brain and have the stomach to stand by it, as decisions taken based on emotions can be a real performance killer.
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