Key Metrics for Multibagger Screening
This Multibagger Stock Screener uses adjustable filters based on quantitative metrics often associated with historical 100-bagger stocks, inspired by Chris Mayer's research:
1. Growth Metrics: (Fueling the compounding)
2. Profitability & Efficiency Metrics: (Quality needed for sustainable growth)
- ROIC (10yr % p.a.): Filters for businesses generating high returns on their operational investments, a key quality trait found in many long-term winners.
- Cash Conversion Ratio (10yr): Screens for companies effectively turning profits into real cash flow.
3. Reinvestment Potential & Financial Health:
- Payout Ratio (Div/FCF): Filters for companies retaining a large portion of their cash flow, enabling reinvestment for future growth – a key driver for multibaggers.
- Interest Coverage Ratio: Screens for companies with strong ability to cover debt interest, suggesting financial resilience.
4. Valuation Metrics: (Getting in at a reasonable starting point)
- PE Ratio - R&D adj.: A modified P/E that accounts for R&D investment, potentially offering a better valuation perspective for growth companies.
- PEG Ratio (10yr growth hist.): Balances valuation (P/E) against historical growth. Low PEG might indicate growth at a reasonable price.
- Discount to Fair Value (FCF): Provides a check against gross overvaluation based on historical cash flow growth.
These filters aim to identify companies with a historical blend of high growth, quality, reinvestment potential, and potentially reasonable starting valuations.