Want to find the next stock that could go up 10x or more? This post shows you exactly how, using real data, not hype. You will learn what 464 past 10-bagger stocks had in common before they took off.
The research breaks down which traits truly predicted explosive returns: high free cash flow yield, low valuation, and smart growth. Not fast revenue or recent momentum. You will also get a simple, step-by-step screen you can run today to find these kinds of stocks yourself. If you want a practical way to build a market-beating portfolio, this guide is for you.
Estimated Reading Time: 7 minutes
What if you could screen for stocks with a real shot at going up 10 times or more? Not just hope. Not hype. But hard data.
A new study “The Alchemy of Multibagger Stocks: An empirical investigation of factors that drive outperformance in the stock market” by Anna Yartseva shows exactly what separates true multibaggers (stocks that increase in value several times your original investment) from the rest.
She analysed 464 companies listed on U.S. exchanges that delivered at least 10 times or 1000% return between 2009 and 2024. Then she built a model that tested which traits predicted that growth.
This blog post will show you what she found, and how to use it in your own portfolio, step by step.
What Was Tested
The study used a data-driven approach. It started with the Fama-French five-factor model, which includes
1. size,
2. value,
3. profitability,
4. investment, and
5. market risk.
Then it added dozens of new factors like:
· free cash flow yield,
· EBITDA margins,
· interest rate changes, and
· price momentum
to build a dynamic model.
What is great about this research study is that, instead of just describing what multibaggers look like, the study tested what predicts them.
That means you can use it to screen for future winners, not just admire past ones.
What Markets Were Covered and What Was Included
The study focused on U.S. stocks listed on the NYSE and NASDAQ between 2009 and 2024. That includes large, mid, and small-cap companies, plus ADRs (foreign firms trading on U.S. exchanges).
To make the list, a stock had to rise 10x or more and stay there. If it hit 10x but later dropped below 9x, it was excluded. Companies with incomplete financial data were also excluded.
This ensured the model was based on true long-term winners, not just lucky spikes.
Time Period Covered
Returns were measured over a 15-year period: from 1 January 2009 to 1 January 2024.
But the analysis also looked at company traits going back to 2000. That gave the model a 25-year view of company fundamentals, before they became multibaggers. This matters because it shows what the companies looked like before their big run.
If you want to screen for the next 10-baggers, this is the kind of data you need.
How the Study Avoided Biases
Most investment research is backward-looking and full of hindsight bias.
This study avoided that by using:
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Lagged data: Only data available at the start of each year was used to predict future returns.
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Survivorship filters: Only stocks that stayed above the 10x threshold were kept.
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Out-of-sample testing: The model was trained on 2000–2022 data, then tested on 2023–2024 to see if it could predict future returns.
This matters because it makes the results usable. You can apply these exact rules today.
What The Multibagger Sample Looked Like
This is the exact ratio and indicator values off the 464 multibagger companies the study found:
· Average share price growth over 15-years observation period: 26-fold (21.4% CAGR), including 24 100-baggers
· Size (in 2009 at the start of observation period): small
- Median market cap in 2009: $348 m,
- Median revenue in 2009: $702 m
· Median growth rates over 15 years (2009-2024): reasonably high but not spectacular (apart from net profit and EPS):
- revenue: 11.1% CAGR
- gross profit: 12.0% CAGR
- operating profit: 17.3% CAGR
- net profit: 22.9% CAGR
- earnings per share: 20.0% CAGR
- R&D expenditure: 15.1% CAGR
· Valuation (in 2009 at the start of observation period): low
- median P/S 0.6; P/B 1.1; forward P/E 11.3; PEG 0.8
· Profitability (in 2009 at the start of observation period): average
- gross profit margin 34.8%; operating profit margin 3.9%; ROE 9.0%; ROC 6.5%
Click here to start finding your own Multibaggers NOW!
Exact Company Selection Criteria
Overall, the study examined over 150 ratios to find out what works best to identify multibaggers. Here is how the study sorted companies:
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Size: Based on total enterprise value (TEV), not just market cap.
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Value: Based on Book-to-Market ratio and Free Cash Flow Yield (FCF ÷ Market Cap).
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Profitability: Based on ROA (Net Income ÷ Total Assets) and EBITDA Margin (EBITDA ÷ Sales).
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Investment: Based on asset growth. It flagged companies negatively if asset growth exceeded EBITDA growth.
To build a similar screen:
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Calculate Book-to-Market = Total Equity ÷ Market Cap.
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Calculate Free Cash Flow Yield = Free Cash Flow ÷ Market Cap.
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Calculate ROA = Net Income ÷ Total Assets.
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Flag risky firms where Asset Growth > EBITDA Growth.
How Often Was the Portfolio Rebalanced?
The model updated each year. Every January, it sorted stocks based on the criteria above and predicted the following year’s return.
This mirrors how you might build your portfolio:
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Screen once per year.
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Buy a basket of qualifying stocks.
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Hold for one year.
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Re-screen the next January and rebalance.
This keeps things simple, systematic, and rooted in updated fundamentals.
What Really Drives 10-Bagger Stocks?
This study looked at 464 stocks that rose 10x or more between 2009 and 2024 on U.S. exchanges.
The goal? Identify what these companies had in common before their massive run. What the research found may surprise you.
Key Takeaways You Can Use
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Growth not needed: You do not need fast-growing earnings to find a multibagger. Most 10-baggers did not have strong EPS growth before they took off.
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Fama-French still works: The best-performing stocks were small, cheap, and profitable.
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Cash is king: The strongest single predictor was Free Cash Flow Yield. High FCF yield beat every other metric.
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Smart growth only: Companies that invested aggressively without the same or higher earnings growth underperformed. You want asset growth that is backed by the same or larger EBITDA growth.
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Interest rates matter: A rising Fed rate hurt future returns. Specifically, when rates went up, next-year returns dropped by about 10%.
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Momentum reversals are common: Many multibaggers fell sharply before they rose. Stocks trading near their 12-month high often delivered lower returns.
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Best time to buy: Multibaggers often start their run from near a 12-month low, especially if the price dropped in the last 6 months.
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Markets are not efficient: These traits: valuation, profitability, smart investment, and entry point—predict future performance. That challenges the Efficient Market Hypothesis.
What This Means for You
If you want to find the next 10-bagger, ignore the hype. Look for:
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Small companies – Under 2bn market value (Not defined in the research paper)
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High Free Cash Flow Yield
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High Book-to-Market
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Asset growth less than EBITDA growth
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Stocks trading off their highs, ideally near a 12-month low with a price fall in the past 6-months
And buy before the crowd sees the story.
In short, the multibaggers were small, cheap, profitable companies growing in a sustainable way.
Surprising Finding: Growth Did Not Matter
Here is what surprised me.
Earnings growth, even over 3 or 5 years, did not predict multibagger returns.
Many 10-baggers grew slowly or erratically before their big rise. The key was valuation and cash flow, not fast revenue growth.
Even more surprising, price momentum had a negative effect. Stocks that were near their 12-month highs were less likely to outperform. So, chasing recent winners may backfire.
Click here to start finding your own Multibaggers NOW!
How You Can Apply This Today (Step-by-Step)
You do not need a PhD to apply this all you have to do is follow the system. Read the complete study to get a good idea of the process and how the research was done.
Simplified, here is a step-by-step system you can use to find multibagger ideas right now:
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Use a stock screener with all the ratios mentioned in the study.
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Filter for U.S. stocks with:
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Free Cash Flow to Price in the top 30%
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Book-to-Market top 30%
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Price Index 12m bottom 50%
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Price index 6m bottom 40%
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Asset Growth < EBITDA Growth
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Optional: Focus on market cap < $2Bn for more upside.
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Rebalance once a year, using updated data. The study used January but anytime will be fine. April or May may be best as most companies with a December year end would have filed their year-end reports.
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Hold for 12 months, then repeat.
You can use a spreadsheet or a professional screener like ours that includes all these ratios.
What It Looks Like in the Screen
This is what the process looks like in the Quant Investing multibagger screen.
The Screen:
Output from the Screen:
Check If EBITDA Growth Is Higher Than Asset Growth
Final Thought: The Next 10-Bagger Is Out There
You do not need to find the next Tesla. All you need to do is find the next underpriced, cash-generating, well-run company that is quietly compounding value.
This study shows you how. No stories. No guesswork. Just the numbers that matter and a repeatable system you can follow.
And once you start seeing how powerful this approach is, you will wonder why you ever relied on headlines or hot tips.
Want help building this screener?
We built our platform for investors like you, for people serious about returns, sceptical of noise, and ready to take control. You can screen for these exact multibagger factors with our screener.
Start your 30-day free trial. Then start finding your next 10-bagger.
Click here to start finding your own Multibaggers NOW!
FREQUENTLY ASKED QUESTIONS
1. How can I spot a potential 10-bagger before it takes off?
Look for small, cheap, and cash-rich companies. Use these filters:
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Free Cash Flow Yield in the top 30%
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Book-to-Market in the top 30%
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Stocks trading near 12-month lows
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Asset growth lower than EBITDA growth
This tells you the business is undervalued, generating cash, and not growing recklessly.
2. Do I need high growth to find a big winner?
No. The study found earnings growth before the stock took off was often low or average. What mattered most was valuation and cash flow, not fast sales growth.
3. Is it risky to buy stocks after big price drops?
Not always. Many 10-baggers started their run after falling in price. If the fundamentals are strong, a falling price can be a great entry point. Just make sure the company is still profitable and has solid cash flow.
4. How often should I check or rebalance my portfolio?
Once a year is enough. The study used a yearly rebalance, updating the screen every January. You can do it any time of year - April or May is smart because most companies have published their annual results.
5. Why should I avoid stocks with fast-growing assets?
If a company grows its assets faster than earnings (EBITDA), it may be spending too much without getting results. This can lead to lower returns. Look for companies where EBITDA growth is higher than asset growth.
6. Is it better to follow the crowd or go against it?
Go against it. The study found that stocks trading near 12-month highs often underperformed. The best opportunities came from unloved, undervalued stocks that others had ignored.
7. What is the easiest way to apply this system myself?
Use a screener with the right metrics:
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Free Cash Flow to Price
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Book-to-Market
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Price Index (12m and 6m)
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EBITDA Growth vs Asset Growth
Quant Investing’s platform includes all these. You can screen once a year, buy a few top-ranked stocks, and rebalance the next year. Simple and effective.
