How to pick a stock that multiplies?

[Ken]

Gday,

My goal over the next 12-18 months is to pick a stock that multiplies by 2,3,4,5.

I think a 10 bagger is something real special. I am wondering for those who have had one, what do you look for?

The price range I am thinking is at is 8 to 10 cents, 10 cents to 20 cents.

Do you look for an initial large volumes where theres a massive volume spike?

Or do you read the fundamentals of the company and wait for the market to realize its value?

Is the number of shares issued important?


Looking at stocks like CQT, the initial price spike was from 4 cents to 10 cents. On close to 20 million volume. Then there was a massive amount of volume traded from 10 cents up to 40 cents. 30 million shares.

Since then volume has dropped off a little the rise from 50 cents to current price has less volatile.


Surely there's investors out there who think they are sitting on a winner.

If so why? And whats your strike rate?

 

[insider]

Re: how to pick a stock that multiplies.

Gday,

My goal over the next 12-18 months is to pick a stock that multiplies by 2,3,4,5.

I think a 10 bagger is something real special. I am wondering for those who have had one, what do you look for?

The price range I am thinking is at is 8 to 10 cents, 10 cents to 20 cents.

Do you look for an initial large volumes where theres a massive volume spike?

Or do you read the fundamentals of the company and wait for the market to realize its value?

Is the number of shares issued important?


Looking at stocks like CQT, the initial price spike was from 4 cents to 10 cents. On close to 20 million volume. Then there was a massive amount of volume traded from 10 cents up to 40 cents. 30 million shares.

Since then volume has dropped off a little the rise from 50 cents to current price has less volatile.


Surely there's investors out there who think they are sitting on a winner.

If so why? And whats your strike rate?

Do what I did!!!!

DYOR... I bet that's not the answer you wanted... lol

 

[Ken]

Re: how to pick a stock that multiplies.

Yes but what made you choose between 2 stocks...

I chose EXT @ 7 cents over EVE @ 10 cents. EXT has returned nothing whilst EVE has multiplied what stands out in making your winning decision.

 

[purple]

Re: how to pick a stock that multiplies.

Do what I did!!!!

DYOR... I bet that's not the answer you wanted... lol

Sigh insider...that's not the answer I wanted too...you were suppposed to give some hot stock tips...

oops here's Joe comin' .... :whip HELP!!

Ok before Ken starts getting at the non-answers, yes, what i do is:

Read the fundamentals of the company and wait for the market to realize its value and basically read everything about the stock:

- google
- ASX stuff
- their website
- announcements
- gossip (from the forums)

 

[insider]

Re: how to pick a stock that multiplies.

Yes but what made you choose between 2 stocks...

I chose EXT @ 7 cents over EVE @ 10 cents. EXT has returned nothing whilst EVE has multiplied what stands out in making your winning decision.

What made me sell EXT @6.3 cents was I didn't like the attitude of the directors... constantly diluting the share price... I don't like WA except for the women... wawawiwa... Political issues... and you can tell that the share price is manipulated given the lack of growth and number of day traders... That was enough for me to sell at a loss and never look back again...

I then compared rival companies and realize how pathetic EXT are...

The list goes on... DYOR really is the best thing you can do... the more research you do the more confident you become with your decisions...

DYOR is what made me choose to huge winners which are DYL (don't own them any more) and MTN (I no longer disclose my position)... Just yesterday I bought into a company and hopefully they pay off... I probably haven't done as much research on them as in the past, but just enough for me to feel quietly confident...

You need to understand the market, industry, the company and all the nitty gritty issues they may face

I hope this helps... It's actually allot of hard work In my opinion

 

[wayneL]

Re: how to pick a stock that multiplies.

Sigh insider...that's not the answer I wanted too...you were suppposed to give some hot stock tips...

oops here's Joe comin' .... :whip HELP!!

Ok before Ken starts getting at the non-answers, yes, what i do is:

Read the fundamentals of the company and wait for the market to realize its value and basically read everything about the stock:

- google
- ASX stuff
- their website
- announcements
- gossip (from the forums)

DD on fundamentals and sentiment is very important. But never underestimate the role of luck either.

 

[insider]

Oh I almost forgot... what earns you a ten bagger is when you buy a company and always research it with out biased opinions

 

[purple]

Re: how to pick a stock that multiplies.

I hope this helps... It's actually allot of hard work In my opinion

Yep...that's true...I usually pyramid into stocks and spend about a month researching and buying more parcels.

I work 5 1/2 days (darn construction!) and have barely a few hours here and there to read and read....before i know it, the days fly by.

There's no hard and fast rule...gotta keep reading and finding out everything I can about the company...if I like it I pyramid in, if I start finding fishy stuff I start pulling out...

DD on fundamentals and sentiment is very important. But never underestimate the role of luck either.

I also trade the China market...and over there, gossip is the no.1 factor that quite often overrides fundamentals. people religiously adhere to analysts' recommendations and friend's gossip...

The chinese are not so much 'reading' people and they don't research much.

So it's a different ball game over there.

Here in the ASX, people read more and research better but still, sentiment is a very strong wave.

 

[nizar]

I would look for:

*Low market cap
*CHeap share price
In my opinion, and this can probably be proved statistically speaking, its much more likely for 10c-$1 stocks to go to $1-$10 than $10-20 stocks going to $100-200.

Also.
Oppies. You can achieve this easily if you buy oppies that are just out the money and you have reason to feel the heads are going to run because of:
*imminent announcement
*fundamentally undervalued
*blue sky breakout

For example, HLX oppies. In January the heads were about 12-13c and the oppies (20c conversion, short expiry) were going for 2-3c.
Then the heads started running to about 25-30c making the oppies in the money, so thats about double your money for the heads, oppies went to like 10-12c (4 or 5 bagger).

JMS as well a good example, i bought the heads at 22c, sold at 34c, thought i was a champion coz i made 50% in one day, oppie holders made 6-fold (the next day even more)

Look at LBY recently, went from 17c to 25c in one day, the oppies, which were out of the money below 20c, were going for about 0.01. When the heads ran, which was expected by those that did their research and knew an announcemnet regarding their uranium plays was imminent, the oppies went to 5-6c, at least a 5-bagger.

 

[chops_a_must]

I would look for:

*Low market cap
*CHeap share price
In my opinion, and this can probably be proved statistically speaking, its much more likely for 10c-$1 stocks to go to $1-$10 than $10-20 stocks going to $100-200.

Tell that to CSL, lol! It has effectively doubled in the year, with a 10% gap up in the middle somewhere.

But in general I agree with you. Small market caps regardless of present share price will always provide little overhead resistance. On the flipside, it can go the same way in the other direction. If you can learn to use the volatility in your target shares, you can undoubtedly use it in your favour. It's great for picking exits and entries. So long as there is liquidity for you to exit the position (which is a real problem on some stocks) low share price stocks with small market caps aren't a real problem.

More specifically for you Ken,
The question I am asking is why are you only restricting yourself to stocks under 20 cents? An initial stock price of $1 on ZFX didn't stop it from running hard into the high 10s. A stock in the low 10c range needs huge momentum etc. to keep running above one tick, as it may be about 5-6% per tick it is doing. A stock with a slightly higher price might be able to sustain a longer run if it doesn't have to do 5% a day. The danger with those lower price stocks is that they are likely to be day traded due to the gain on one tick. And that inevitably has the potential to stop any SP gain at the end of each day.

I am a relative noob to share trading and things, but am holding two baggers as of now (and am very happy with this result considering the time I have been serious about trading), and one that would be now if I hadn't sold at my target price. But I don't have a problem in doing that if the SP does 30% in less than a week. As you only have to have 3-4 good weeks a year on 3-4 good stocks to be able to double your money.

Take a look at this Ken:



Charts that looked almost literally like that gave me entries to my two baggers, AOE and AED. And at the time I had very little knowledge of either. But charts like that don't seem to come around very often, so I get in when I can. By the way, for trades based on charts that I would say are in that "staircase" or "escalator" category, I have a 100% win percentage. I'm not sure if the charts for those stocks still look like that or not, and I'm not too bothered... Lol! MEL is a stock I have picked on this chart pattern also. It hasn't bagged yet, but I would be surprised if it did eventually given the type of price action it has.

To me, your goal is one of price, so the entry has to be picked on price action. You only have to read about INL on the web to see how F/A can be way off the mark and become totally ignorant of the thing that will make you money, SP appreciation. Don't get me wrong, I don't think you should disregard F/A analysis totally, but for someone looking for a "bagging stock", it should perhaps be a secondary consideration.

I will explain my system if it helps:
1) I look at sectors I think will, or are doing well.
2) I find the best stocks within each sector both fundamentally and chart wise (primarily chart wise). Peer analysis is the easiest for F/A.
3) I put all of the stocks I find in each sector (weak or strong) onto a watchlist, and become familiar with each stock's behaviour, as well as monitoring for changes of the sector and my stocks in comparison.
4) This gives me the confidence in that I feel as if I could have many new trades going at any one time. So if any of the trades fall over, hit a stop or an exit price, I always have an opportunity to snag a run.

And as I am young, and don't have huge amounts of money, I am much more discerning with my choices than I probably would otherwise be. If I had more capital I would probably look at a more blanketed approach rather than such a targetted one like I have.

The other strategy I look at, is buying into stocks that are forming strong ascending triangles. Unlike Nizar who buys on breakouts (which is safer), I like to get them before they go.

I have had good results from doing this. MCR (the other potential bagger) ESG (looks now to be forming a staircase), PLA, VRE, MRE, BBW, CSL and many other ones I can't remeber right now, have all been picked by doing this. In most cases, the stocks had been sitting just below previous highs with good news etc. abounding. It was clear that they were going to go, it was just a matter of when. How many of these will go on to double? Who knows, but one fact is for certain, none have even looked like touching the levels they broke out from. VRE would only have to go up another 25% or so, for my VREO to be mainly baggers for example.

I guess the point I am making is, try and find stocks that are strongly trending upwards, that have a clearly and strongly narrowing daily trading range, that are at or very near all time highs. A lot of these small stocks (like VRE) will have a significant information to market lag, so you can snap them up before everyone else gets wind of them and before they break. The key there becomes the narrow range.

Trading on similiar methodologies to these, has been shown by many other people as the way to get really good results. So maybe it's something you could look at trying out?

I hope this gives you a few ideas anyway.

NB. The stock codes aren't buy recommendations, it's just so that it is easier for you to know what I'm talking about chart wise.

Cheers,
Chops.

 

[dj_420]

it also depends how much research you can do and how often you can check the market.

if you are just looking at sticking your money in somewhere and leaving it, you are better off finding an undervalued producer or near producer (for mining stocks) and leaving money in there long term as long as market fundamentals dont change.

i dont know much else about any other sector apart from mining and i will change my tune in a couple of years when boom is peaked. until then the mining sector is going great guns and i figure thats where the money is so ill keep it there.

if you are looking at mining sector i would recommend looking at www.kitcometals.com and beginning to understand the fundamentals of metals markets. find out what is in demand, ie is in short supply and there are no forecast supply changes and find a good undervalued producer.

thats what i did last year and found zinc to be a great winner jumping on CBH and JML for 8 6 months or so. disc still holding JML.

in hindsight i would have been better off putting money into nickel producers around that time as they have actually returned many multiples more than the zinc producers. HOWEVER that is hindsight and should just be a lesson learned.

IMO this year i am still bullish on zinc and super bullish on uranium and nickel. not so much copper and aluminium.

good luck with it

 

[jet328]

One up on Wall Street by Peter Lynch is well worth the read

 

[bvbfan]

I've had a pretty good success at picking multiple baggers, probably running around 50-60%.
The only issue I've had is trying to trade a few of these to generate income or compound the profits into more shares, only for the share to keep on moving right along. Or waiting for that extra 0.5 of a cent drop
(AGS buy order at 24.5c)

I would say that small cap, low price stocks fit best with a long time horizon. However don't rule out stocks at $1 or more.
CMR, MOL, WOR, ALL would be prime examples of stocks that have well even at $1


Anyway past picks were
OXR at 10c (still holding for 2009-10)
PNA at 4.5c (sold 5c for most, bought back in at higher prices, since sold)
SDL at 8c (sold 9c)
ADY traded quite a few times, sold last lot at 9c and long term holding recently at 20c
MOL at 1.30's traded a lot and since sold between 3.50 and 4.30
CMR 1.00 and 1.30 sold at 1.60

A few others to mention and picking up a few at the moment but waiting for a large correction which i think is due in the next month or so, which was only brought to my mind by the completely bullish views expressed by various high end officials like the KKR partner, Indian Central Bank governor with comments made in last few days. It all reminds me of comments made in the months before 1929

 

[greggy]

I would look for:

*Low market cap
*CHeap share price
In my opinion, and this can probably be proved statistically speaking, its much more likely for 10c-$1 stocks to go to $1-$10 than $10-20 stocks going to $100-200.

Also.
Oppies. You can achieve this easily if you buy oppies that are just out the money and you have reason to feel the heads are going to run because of:
*imminent announcement
*fundamentally undervalued
*blue sky breakout

For example, HLX oppies. In January the heads were about 12-13c and the oppies (20c conversion, short expiry) were going for 2-3c.
Then the heads started running to about 25-30c making the oppies in the money, so thats about double your money for the heads, oppies went to like 10-12c (4 or 5 bagger).

JMS as well a good example, i bought the heads at 22c, sold at 34c, thought i was a champion coz i made 50% in one day, oppie holders made 6-fold (the next day even more)

Look at LBY recently, went from 17c to 25c in one day, the oppies, which were out of the money below 20c, were going for about 0.01. When the heads ran, which was expected by those that did their research and knew an announcemnet regarding their uranium plays was imminent, the oppies went to 5-6c, at least a 5-bagger.

Hi Nizar,

Good post. I agree with the bulk of what you've said here, but wish to add my two cents worth. Many of us like to pick multi-baggers but in many cases people tend to sell too quickly. I'm still working on being a little bit more greedy, but I also hold the view one doesn't go broke taking a profit.
In relation to picking multi-baggers I try to go for the options of overlooked stocks which are towards their lows in terms of share price. The only options I'm holding at present are 555,000 options (expiry date: 30 Jun 2012) in PXR. The reason for buying the options is that the expiry date is 5 years away and is a leveraged play. I only tend to buy them when there are long expiry dates involved. Every day I browse the papers looking for overlooked stocks with good management. Recent examples include HNR, MZM, NAV and RMG. I then narrow the find after examining their interests. If they are not interesting enough I strike those particular companies on my watch list. For me nearology also plays a significant part. Take the case of PXR. Its right next door to NTU's Gardiner Tanami Super Project yet many people out there don't realise this considering PXR's share price (extremely low on a comparative basis). When a company has exploration success companies nearby often get re-rated also by the market. If a certain sector looks as if its getting hotter and is likely to remain hot for a while, I try to pick an overlooked stock within that sector.
Sound cash levels also plays an important. Companies require enough cash in order to implement an active exploration program.
DYOR

 

[Dutchy3]

I recently posted under CMO

This stock has returned greater that 100% in a few months and is still going ... this is all I look for ... charts that reconcile with what CMO looked like. Might only take 10 - 20 positions in a year, and while I do struggle to contain myself sometimes I've found my returns get quite staggering by not mucking around with something that appears second best.

Hope this helps

 

[eternit]

it also depends how much research you can do and how often you can check the market.

if you are just looking at sticking your money in somewhere and leaving it, you are better off finding an undervalued producer or near producer (for mining stocks) and leaving money in there long term as long as market fundamentals dont change.

i dont know much else about any other sector apart from mining and i will change my tune in a couple of years when boom is peaked. until then the mining sector is going great guns and i figure thats where the money is so ill keep it there.

if you are looking at mining sector i would recommend looking at www.kitcometals.com and beginning to understand the fundamentals of metals markets. find out what is in demand, ie is in short supply and there are no forecast supply changes and find a good undervalued producer.

thats what i did last year and found zinc to be a great winner jumping on CBH and JML for 8 6 months or so. disc still holding JML.

in hindsight i would have been better off putting money into nickel producers around that time as they have actually returned many multiples more than the zinc producers. HOWEVER that is hindsight and should just be a lesson learned.

IMO this year i am still bullish on zinc and super bullish on uranium and nickel. not so much copper and aluminium.

good luck with it

Hi,

I am interested to know what resources you are investing in now? and what particular companies?

I have read that there is an expectation of a correction soon.

Thanks

 

[Peakey]

I recently posted under CMO

This stock has returned greater that 100% in a few months and is still going ... this is all I look for ... charts that reconcile with what CMO looked like. Might only take 10 - 20 positions in a year, and while I do struggle to contain myself sometimes I've found my returns get quite staggering by not mucking around with something that appears second best.

Hope this helps

Hi Dutchy,

Would it be fair to say that you look for Weinstein stage 1 setups???

 

[Dutchy3]

Hi Peakey

Yes ... exclusively....

I picked CMO, BGN, NDO, (trying to be cute with CUE) ZFX (albeit this is a day chart position, not weekly) SBM, DJS (again daily) .... all in the last month or so .... and to me all reconciling to the stage I move or stage II continuation breakout.

Everytime I attempt to trade another method my returns falter ...

 

[Peakey]

Hi Dutchy,

Yeah I'm in a similiar boat to yourself, I'm trying to build a system that flags potential Weinstein stage 1 setups.

Just curious, what sort of time frame do you place on your Weinstein trades and what sort of exit do you use?

Cheers
Peakey

 

[Dutchy3]

Hi Peakey

I'd love to use it when you do! I've tried for years, in MS, to no avail.

I literally view 500+ stocks a week/month visually looking for what could be the early stages of the set ups. My watchlist is littered with stocks that may or may not form up ... I might watch them for months.

I too prefer the weekly charts to capture the bigger moves ... although a daily entry is not out of the question.

Exits are basically trailing stops although I have sold what looked like blow off tops ...