On The Multi-bagger Hunt: 3 Portfolio Ideas

23rd Jun '23 by Megan Boxall

5 comments 4123 reads

This week at Stockopedia we have focused our attention on the growth style of investing - a strategy which benefits from the combined market forces of quality and momentum. I have written an introduction to the strategy, describing how it works and which successful investors you can learn from when trying to replicate the style. Mark has crunched the data to assess the optimum holding periods and portfolio sizes when pursuing this strategy. And I have taken a look back at recent multi-baggers in an attempt to uncover any shared qualities in the companies which multiply for their investors.

And now, we have come to the final article in the series - the one which Ed insists is the one you’ve all been waiting for - five potential future multi-baggers, growth stocks which return more than 100% for their shareholders.

It goes without saying that ‘potential’ is a key word here. I don’t have a crystal ball or a time machine and don’t know what will happen to these companies in the coming years. The shares presented in the article below are, for now, simply ideas. I have not committed to buying any of them myself as I want to spend a bit more time researching them, I would suggest that any readers who are interested by the selection do the same.

First Principles: Building a long list of multi-baggers

Before we dig into the good stuff, I thought it was worth running you through my process so far in my quest for a potential multi-bagger.

First, I made a screen based on the previous research I had done into identifying multi-baggers and the insights from guru investors and experts. I was attempting to narrow the field of stocks to only those which exhibit the characteristics which previous successful stocks showed at the start of their journey to multi-bagger status. The rules I used were:

Market Cap: £20m to £1bn
Geography: Western Europe, UK, Australia, US and Canada
Sector: Not energy or financials
Growth: Sales and EPS growth in the last 12 months greater than 10%
Quality: Operating margins and ROCE greater than 15%
Room for multiple expansion: PE less than 20

You can see all the results from the screen here. I have kept the criteria deliberately loose in an attempt to try and scoop up as many exciting stocks as possible (with…

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“NET Power’s technology is simple:
it makes clean, reliable, low-cost energy.

We figured out how to make the problem (CO₂) part of the solution through a crucial innovation. Unlike existing technologies, the NET Power Cycle is closed to the environment.

“NET Power works by combusting natural gas with pure oxygen in a combustor, producing CO₂ and water. We mix this with recirculated CO₂ and use it to spin a turboexpander, producing power. When the turboexpander exhaust cools, water and byproducts are removed.

What remains is CO₂. Most of the CO₂ is compressed and recirculated back to the turboexpander while a small portion exits the cycle, like a slowly overflowing bucket, and is captured. The captured high purity CO₂ can be easily sequestered or sold to industry. Nearly all CO₂ is ultimately captured through the process.”

Their business model is to licence out their intellectual property and there are now several early stage full scale projects going ahead. One of these is on Teeside.

It’s not one for those of a nervous disposition!

Rusty2

23rd Jun '23

Hello Megan, I'm struggling to understand why you picked Proteome Sciences (LON:PRM), when it fails on 3 counts, to qualify for your screen.

Quest

I am looking at NET Power (NYQ:NPWR) as a possible multi bagger . It’s quote on NYQ is very recent so financials are virtually non existent .It has some heavy hitter Oil & Gas investors including Baker Hughes Co (NSQ:BKR) .

“NET Power is a clean energy technology company with a mission to globally deliver the “Energy Trifecta”: clean, reliable, and low-cost energy. We invent, develop and intend to license technology that provides reliable, on-demand natural gas power with life cycle emissions that are 90 percent below today’s combined cycle natural gas systems and in line with renewables coupled with batteries. Our technology also delivers a levelized cost of energy that is below both combined cycle gas turbines with carbon capture and renewables coupled with batteries. Founded in 2010 and headquartered in Durham, North Carolina, NET Power has received strategic investments from key industry partners including Occidental, Baker Hughes, Constellation and 8 Rivers.”

Andy Sav

Sosandar (LON:SOS) for me. Recently moved in to profit. Successful launch on other market place sites (Sainsbury, M&S, John Lewis etc). Now talking about growth into other countries. Could be a good growth stock long term

Clementwether

26th Jun '23

Hi, maybe its just me, but the You can access that full shortlist here link doesn't seem to work. Thanks

Re NET Power (NYQ:NPWR) : It perhaps worth mentioning that the power plants are utility scale around 300 megawatts as a base load but able to peak up to about 370 megawatts. This is around the size of the new generation SMR ‘s such as Rolls Royce’s proposal.

On the multi-bagger hunt: 3 portfolio ideas

First Principles: Building a long list of multi-baggers

Unlock the rest of this article with a 14 day trial

About the Author

Megan Boxall

5 comments

“NET Power’s technology is simple:
it makes clean, reliable, low-cost energy.

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...

On the multi-bagger hunt: 3 portfolio ideas

First Principles: Building a long list of multi-baggers

Unlock the rest of this article with a 14 day trial

About the Author

Megan Boxall

5 comments

“NET Power’s technology is simple:it makes clean, reliable, low-cost energy.

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...

“NET Power’s technology is simple:
it makes clean, reliable, low-cost energy.