This was a nice opening, as I have also been thinking about these things for over three decades myself. There is unlikely to be any so-called definitive answer, but there will probably be enough opinions and speculation to last a lifetime. At the very least, you need good innovations, solid management, often investors who believe in the cause, the ability to deliver the product or service to the customer, and a solution or benefit for the customer that they feel is worth their money and are even willing to commit to for the long term. Of course, moats and scalability are advantages for rapid growth. So-called good luck doesn’t hurt either, and you can give luck a better chance through hard work. It’s also good to remember this old saying: if you’re right but too early, you’re wrong. The market isn’t always ripe for even a great idea or product. These are fairly obvious points I’ve listed, so I won’t ramble on any further.
I can’t recommend any specific literature, but if I recall correctly, Verneri did a good summary (a video clip) on these multibaggers about a year ago? Maybe some forum member remembers better if it was him or someone else?
I have a highly diversified portfolio, in which I have also acquired a few companies that fit right into this thread. I could actually mention a couple:
Bioretec: first in the world to receive FDA approval for a biodegradable bone implant
Aiforia: AI-based tissue sample analysis. Strong partners
These are rewarding targets in the sense that both have Inderes coverage and good reports, from which you can then draw your own conclusions.
On the energy side, I strongly believe in the hydrogen sector, where green hydrogen production will grow very rapidly in the coming years. My portfolio includes Plug Power and Bloom Energy, among others. Similarly, solar power systems are becoming common globally at a fast pace. I have Enphase in my portfolio for that. The green transition also involves the domestic Spinnova, which has a killer concept at least on paper, as long as they can scale production fast enough and find enough demand for their fiber at a suitable price.
Of the above-mentioned, Enphase is already a stable and highly valued company, but I wouldn’t consider it 100% impossible for it to tenfold as well, if/when they add, for example, a compact home electrolyzer to their offering. A lot can happen in 10 years…
It could also be noted that a 10-bagger in business and a 10-bagger in value don’t always go hand in hand, but the price tag will certainly rise nicely if revenue increases tenfold without massive dilution of the share count. From an investment perspective, you still have to evaluate what a sensible purchase price is. P/S can be almost anything—let’s say between 0.2 and 50—and it is influenced by countless things, not least the prevailing hype around the topic.
Furthermore, as you asked about the most essential thing, it might be long-termism. The act of actually making a 10-bagger possible in your portfolio. The thing is, when a stock has multiplied several times over, there can be an irresistible urge to take profits or “swing trade” to buy back cheaper (which then never becomes possible and you miss the train). I have lost massive returns this way myself.
Another essential thing for me is that the company has ambitious goals, profit prospects, and the most credible roadmap possible, which is then consistently followed. (Well, it can be modified if there are good reasons as the world changes.)
These are not buy recommendations and I take the whole topic with a grain of salt, because predicting the future is quite difficult—since we can’t even always agree on the past : )
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