The selection of companies presented below aims at building a portfolio invested in equities according to a "dynamic" investment strategy.
This list of companies aims to capture the returns of stocks that have been multibaggers over the past five years. The term was coined by Peter Lynch in his famous book "One Up One Wall Street" in 1988 to describe stocks that have increased more than twofold. For example, a 10-bagger is a stock that has increased in price by a factor of ten since its initial public offering.
Even if it is impossible to predict their future trajectory, stocks that have already seen their price multiply by two, four, ten or fifty times are more likely to continue to rise over time than stocks that have been stagnant for many years.
As you can see, a multibagger that has offered its shareholders good capital gains in the past is not an indicator of future performance for the holder of these shares. Nevertheless, there are champions among these stocks that will continue to outperform the markets in the medium and long term. As an example, let's look at the US market. It has the advantage of more history and more examples of such stocks. Approximately 45% of all stocks listed in the US between 1950 and 2021 have managed to increase their market value by a factor of five during this period. Of the stocks that have grown fivefold, three out of ten of these stocks will grow fivefold again.
Among those companies that managed to increase their share price by 25 times, three out of ten will see their market value increase by five times again. Finally, among those stocks whose market value has been multiplied by 125, three out of ten will again do five times, or 625 times the IPO market value. The winning stocks of tomorrow are likely to have been winning stocks in the past.
This style of investment starts from this observation to detect stocks with high potential. The companies underlying these stocks have demonstrated a certain operational performance in the past that has been reflected in the stock price. The price of a stock is directly related to several factors, such as a company's ability to generate and grow earnings, the nature and value of the assets it owns, its credit rating, its competitive positioning, future expectations about the company, the market environment and investor sentiment, as well as other non-financial factors.
In simple terms, there are four drivers of stock growth: revenue growth, profit margin growth, increased valuation, and reduction in the number of shares outstanding. The stocks listed below have generally benefited from these four drivers to grow faster. This explains why some stocks have seen their share price increase by 900% in five years, while their sales have "only" doubled during the same period of time.
Companies of relatively large size (with a market capitalization of more than one billion dollars to date) and sufficient liquidity (average daily volumes traded on the stock must exceed one million dollars) are selected. Several geographical areas are proposed. The global list includes companies listed on the world's main financial markets. The other lists are regional: North America (United States, Canada), Europe, Asia (Japan, Australia, Hong Kong, Singapore), Emerging Markets, United Kingdom, France, Germany, Switzerland, Netherlands and Italy.
We display only the 100 best performing stocks of the last five years (respecting the above criteria) for each geographical area and the 20 best performing stocks for each country (provided that they have at least doubled in the last five years).