Just to set the ball rolling, an investment of Rs. 10000 turned Rs. 1.50 crore in 10 years! Isn’t it astonishing? Westlife Development, the master franchisee of McDonald’s restaurants in West and South India, delivered a whopping 1449 times return, as of 1st March 2019. An investment if Rs. 10000 in Westlife Development, in March 2009 has grown to Rs. 1.45 crore as of March 2019.
How to get such Ideal Returns?
Returns on stock do not come easily, nor is it easy to spot such type of stocks. A research on prospective investment opportunities should be done by the investor, ignoring the time constraint, so as to increase his chances of spotting such big companies.
Step 1:
While differentiating the wheat from the chaff, you must ideally look for:
1. A company who has been reporting a steady earnings growth.
2. A company having a competitive advantage, which is likely to make profits in the near future.
These were the basic parameters that you may take into consideration, in order to judge a company.
Step 2:
Look for basic traits of the company by considering certain technical parameters such as:
1. Clean balance sheet.
2. Revenue visibility.
3. Scalability.
4. Sustainability.
5. Good leadership.
Step 3:
Make an in-depth analysis of the company and its stock valuation. The important parameters to be taken into consideration are:
1. The price at which the stock is bought.
2. Return on Equity. Must be high.
3. Return on capital employed. Must be high.
4. The company’s operating performance. The two major components that can determine the company’s operating performance are:
• Its top line, and
• Its operating profit.
5. The consistency of the company in earning profits, even in a weak macro environment.
If the above three steps are abided by, you are set to make a decision, whether to invest in the company or not.
Companies which have shown a growth of over 5000 percent in the last decade
Along with Westlife Development, there are other companies which have shown tremendous growth over a period of 10 years:
1. Bajaj Finance: where an investment of Rs. 10000 would have turned to around Rs. 57 Lakhs.
2. Avanti Feeds: where an investment of Rs. 10000 would have grown to 33.30 Lakhs.
3. Astral Poly Technik: where an investment of Rs. 10000 would have grown to 33.24 Lakhs.
4. Ajanta Pharma: where an investment of Rs. 10000 would have grown to 14.7 Lakhs.
5. Eicher Motors: where an investment of Rs. 10000 would have grown to 9.47 Lakhs.
6. Natco Pharma: where an investment of Rs. 10000 would have grown to 6.74 Lakhs.
