Tuesday, August 16, 2022
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Things to know about Multibagger Blue Chip Stocks

First, if your intention is to make huge profits through blue chips, then you probably have to look beyond the Sensex stocks. Its true that there are a number of quality stocks in Sensex. But, if you expand your outlook, you will find more blue chip stocks that provide better gain in the long run.

FEATURES OF MULTIBAGGER BLUE CHIP STOCKS

  • Low leverage: In fact, minimum debt is hugely essential for companies to keep going through times of high interest rates and tight liquidity.
  • Capital efficiency: We know that the more profit a company obtains, the more value it gains. Here, companies are able to create more stable returns on their shareholders’ equity.
  • Low capital expenditures: Typically, the companies with already done machineries for the future, can benefit from their efforts.
  • Scope of PE expansion: If the business flows in the right direction, stock with low PE multiples will have more PE expansion.

Among these features, PE expansion could be the key ingredient. Because until now, larger PE expansion have produced larger quantum of returns.

TECHNOLOGY CATALYSTS

Presently, technology has an important part to play in our lives. This technology can also change the future growth rates of various businesses. These businesses include automobiles, financial services, healthcare, etc. Technology could act as a catalyst of change. As investors, you need to find those stocks that offer rapid growth in the future.

ARE BLUECHIPS ONE DIRECTION STOCKS?

When we look at the blue chips in India, it is often rare for NSE to trade above 22x valuation. But when it does, even the huge blue chips has given bigger downside for long-term investors. Therefore, the historical data suggests that there is a 60-70% chance for losing money when Nifty trades above 22x.

You can’t buy quality blue chips through index trends. But, take an adversary view on the best blue chips. Always remember to buy any blue chip stocks with a safety-first approach. However, there are also times when the market totally fail on the earnings trend. In that case, find out where the odds are better.

BEST BLUE CHIP STOCKS TO BUY NOW

Buying the best blue chip stocks doesn’t mean buying some Sensex stocks and holding them forever. But, best blue chips are supposed to help you generate as well as preserve the wealth over decades. In order to do that, companies need to grow and add value consistently. Therefore, always be careful while buying the consistent stocks from time to time.

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