Synthetic Ten Bagger

Investment Analysis Clubs Saul’s Investing Discussions
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How good is a Ten Bagger? It depend on how long it takes to get there! I’ve come up with a “synthetic ten bagger.” A ten bagger in ten years has a CAGR of 25.9%. That’s my target, no less than 26%. Anything that produces 26% or better is a synthetic ten bagger.


**Years     CAGR**
    1   900.0%
    2   216.2%
    3   115.4%
    4    77.8%
    5    58.4%
    6    46.8%
    7    38.9%
    8    33.3%
    9    29.1%
 **10    25.9% <-- synthetic ten bagger** 
   11    23.3%
   12    21.1%
   13    19.4%
   14    17.9%
   15    16.6%
   16    15.5%
   17    14.5%
   18    13.6%
   19    12.9%
   20    12.2%
   21    11.6%
   22    11.0%
   23    10.5%
   24    10.1%
   25     9.6%
   26     9.3%
   27     8.9%
   28     8.6%
   29     8.3%
   30     8.0%
   31     7.7%
   32     7.5%
   33     7.2%
   34     7.0%
   35     6.8%

http://softwaretimes.com/pics/ten-baggers.png

Denny Schlesinger

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Denny,

I love this idea!

Just so I’m clear (I’m a little new this board and the numbers you folks look at) are you saying that 26% YoY growth is the bottom limit for investments meaning a company has to be growing at this rate or faster?

Is that revenue growth ? Customer retention? Earnings?

Thanks.

Paul

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3

How good is a Ten Bagger? It depend on how long it takes to get there! I’ve come up with a “synthetic ten bagger.” A ten bagger in ten years has a CAGR of 25.9%. That’s my target, no less than 26%. Anything that produces 26% or better is a synthetic ten bagger.

Great…can you give us a list of those companies that will be 10 bagger from here? :joy:

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Is that revenue growth ? Customer retention? Earnings?

Paul, “ten bagger” is a phrase Peter Lynch came up with as a measure of stock price growth. It applies to stock price. Ten bagger means two homeruns and a double, or ten singles, or five doubles. Do you play baseball? A stock that goes from one to ten is a ten bagger. A stock that goes from 50 to 500 is a ten bagger. At the end of the day what counts is the stock’s price.

Denny Schlesinger

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Great…can you give us a list of those companies that will be 10 bagger from here? :joy:

No…

…but if you ask nicely I might tell you what I use Synthetic Ten Baggers for. :innocent:

Denny Schlesinger

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…but if you ask nicely I might tell you what I use Synthetic Ten Baggers for. :innocent:

After reading Saul’s My thoughts on 10-baggers and buy & hold post I don’t think I will, not here.

Denny Schlesinger

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do you think it is reasonable to expect average annual return rate of >15% for 2 decades?

There will be better years and worst years, and reversal. I don’t think most can expect that.

Legendary investor Peter Lynch maintained a 29% per annum over his active period in the 80s and 90s. There were no major reversal during that time except that 1987 reversal.
This is exceptional.

On average the S&P500 has return 6 or 7% over the very long run.

tj

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do you think it is reasonable to expect average annual return rate of >15% for 2 decades?

That’s not what this thread was about. In any case, it’s closed as far as I’m concerned. We do have a lively Synthetic Ten Bagger tread at NPI and you are welcome to join.

Denny Schlesinger

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