Nathaniel Thiele

A 10,000% gain is all it takes to make a 100-bagger. A 100-bagger is a company that turns $1 into $100.

Here are five helpful tricks to find 100-baggers.

1. Look for businesses that are profitable. Good companies can often use the excess cash flow to pay dividends or perform share buybacks.
2. Find Industries that have decent returns on capital. You don’t need a 15% ROIC, you only need 4% sales growth and 5% ROIC. Some industries are not good long-term investments due to highly volatile and changing environments.
3. Use the Lindy effect to your advantage. The Lindy effect is when a company’s lifespan is equal to how much it has already lived. Older companies are more likely to be around than younger companies due to the experience of the older company.
4. Be a buyer of businesses, not stocks. Most people invest in stocks. You need to find wonderful businesses and buy a business that you would be happy to keep if the stock market was closed for 10 years.
5. Find products and companies that you have experience, the largest investments I have first-hand or second-hand experience with. My grandfather and grandma drink Diet Coke every day, I use a Gillette razor when I shave, my family used Pampers for every child, Kids from my school would always buy NorthFace hoodies, I drink Pediasure, millions of people who have heart problems take Lipitor, and so on.

Simple put as Warren Buffett said, If you only make 2 or 3 good investments you can be set for life.

Good luck investing and I am not a financial advisor.