How to Spot the Next Big Win

Good Evening! 👋

Happy Wealth Wednesday! Ever wonder how a single stock pick could turn $1,000 into $100,000?

Here’s What You Missed Last Week:  

1. The Amazon Of Africa

2. Nvidia Invests In This Hidden Gem

3. Building Wealth With Dividends

Hey there,

Let’s talk about “100-baggers.” You might have heard the term before, but here’s a quick refresher:

A 100-bagger is a stock that grows 100 times in value. Imagine turning a $1,000 investment into $100,000. Sounds pretty amazing, right?

While they’re rare, these stocks do exist if you know what to look for and have the patience to hold on.

Christopher Mayer, in his book 100 Baggers, breaks down what it takes to find these game-changers. Today, I’ll share seven key takeaways from his book, along with some examples from my own investing journey.

Think of this as a roadmap for spotting massive potential.

I’ve used these lessons myself to pick stocks with big returns, and I’m excited to share what I’ve learned with you.

So let’s dive in and start thinking about how to find that next big winner.

Lesson 1: Think Long-Term

The first key to finding a 100-bagger? Patience.

Stocks that reach 100 times their original value don’t get there overnight. These companies need years—sometimes even decades—to grow and evolve. Let’s face it, holding onto a stock for that long isn’t always easy. The market can be turbulent, and sometimes it feels like your patience is getting you nowhere. But if you’re in it for the long haul, this is the mentality you need.

Think about Amazon. Back in the 90s, people saw it as just an online bookstore. Few saw its potential to disrupt retail on a massive scale. Those who held on through the dot-com bubble, the skepticism, and all the volatility have seen returns that are now the stuff of legend.

So, if you’re looking for the next 100-bagger, be ready to commit for the long haul. You’re not just investing in a ticker symbol; you’re investing in a company’s journey, from early growth to full potential.

Lesson 2: Look for Businesses with High Growth Potential

The second key is growth and not just any growth. We’re talking about the ability to scale, which is one of my favorite words in investing. To hit that 100-bagger level, a company has to be in a market with enough potential to grow consistently, reaching more customers, opening new doors, and ultimately expanding its revenue base in the cheapest way possible.

Take Salesforce as an example. The beauty of their model is that they can sell their platform to practically any enterprise around the world. Once they onboard a client, expanding that relationship and adding more services becomes incredibly efficient. That’s scalable growth at its finest.

Or consider Meta. With billions of potential users worldwide, Meta's growth has been practically limitless as long as people have access to the internet. Each new user represents a cost-effective addition to the platform, and the more users there are, the more advertisers want in. That’s the kind of scaling potential that can drive a stock’s value through the roof.

If you’re looking for a potential 100-bagger, pay attention to companies that can grow their reach without dramatically increasing their costs. That’s the kind of growth that turns a good investment into a great one.

Lesson 3: Find Businesses That Require Minimal Capital to Grow

Another characteristic of a 100-bagger is a business that doesn’t need much capital to expand. When a company can grow without constantly reinvesting every dollar back into the business, it frees up cash flow, which ultimately boosts returns for shareholders. The less a company has to spend to keep growing, the more it can pass along profits to investors.

Take See’s Candies, one of Warren Buffett’s all-time favorite investments. See’s isn’t in the business of launching factories in every city or hiring thousands of people to scale. Instead, it’s able to produce high-quality products with relatively low overhead, growing its loyal customer base year after year with limited capital reinvestment. This business model is one of the reasons Buffett considers See’s an ideal investment.

Look for companies that have a similar ability to grow efficiently. They don’t need huge infrastructure investments or endless cash infusions to scale. Instead, they focus on models that keep costs low while still expanding their reach. This kind of lean growth is one of the core characteristics of a potential 100-bagger.

Lesson 4: Focus on Owner-Operators

Another key to finding a potential 100-bagger is looking for companies led by owner-operators—founders or leaders who have a significant personal stake in the company’s success. When a CEO or founder holds a large share of the company, they’re motivated to make decisions that benefit shareholders, not just short-term performance metrics.

One example is Elon Musk with Tesla. Musk’s stake in Tesla means he’s committed to the company’s long-term success, making bold decisions to keep Tesla at the cutting edge. Another example is Mark Zuckerberg at Meta. In 2022, I recommended Meta to my premium subscribers at $129 because I believed in Zuckerberg’s vision. Since then, it’s nearly hit $600, proving how founder-led companies can drive massive growth when their leaders are all-in.

When the person steering the ship has skin in the game, it can make a huge difference. They’re not just thinking like executives; they’re thinking like owners. And that mindset often leads to decisions that drive long-term value, which is exactly what you want in a potential 100-bagger.

Lesson 5: Look for Unique and Strong Competitive Advantages (Moats)

If you’re after a 100-bagger, one of the most important traits to look for is a competitive advantage, or “moat.” A moat helps a company fend off competitors and maintain its position even as it grows. This edge could come from brand power, unique technology, exclusive partnerships, or any number of other factors that keep competitors at bay.

Think about Coca-Cola. The brand is iconic worldwide, with a recognition level that’s hard to match. This brand strength gives Coca-Cola a durable advantage, allowing it to retain customers and fend off countless competitors.

Or consider Google’s dominance in search. While there are other search engines out there, Google has become the go-to platform. It not only dominates the market but also collects mountains of data that improve its algorithms and make it harder for competitors to catch up.

When evaluating a stock for potential long-term growth, think about what gives it staying power. Companies with strong moats can not only survive but thrive in the face of competition, which is essential if they’re ever going to reach that 100-bagger level.

Lesson 6: Watch Out for Consistent Revenue and Earnings Growth

For a stock to become a 100-bagger, it needs to show steady, reliable growth in both revenue and earnings. Companies that can deliver consistent results over time tend to be well-managed and positioned in markets that support sustainable expansion. And it’s this reliable growth that helps attract investors, drive up share prices, and ultimately deliver big returns.

Look at Microsoft, for example. Its revenue and earnings have grown year after year, making it a favorite among investors who value predictability and strength. By showing steady growth, Microsoft has earned the trust of the market and delivered impressive returns over the long run.

Finding companies with a track record of consistent revenue and earnings growth is key. They’re not just one-hit wonders; they’ve demonstrated that they know how to scale effectively. These companies keep delivering the kind of performance that allows them to build momentum—turning them into potential 100-baggers.

Lesson 7: Consider Small Companies or Unpopular Sectors

Sometimes, the best opportunities lie in companies that are still small or in sectors that are a bit out of favor. Smaller companies often have more room to grow, and if they’re in an industry that’s not on everyone’s radar, they can fly under the market’s radar long enough to gain a foothold and deliver big returns for early investors.

I’ll give you a personal example. In July 2020, I spotted Marathon Digital at just 95 cents per share. Back then, Bitcoin and the entire crypto sector were unpopular, with many investors skeptical about the future of digital assets. But I saw an opportunity in Marathon, betting that as the sector matured, Marathon would benefit. Fast forward to the peak of the crypto bull run, and Marathon hit $65, proving how lucrative investments in small or overlooked companies can be when you get the timing right.

The takeaway here is that sometimes, big opportunities come from thinking outside the box. Keep an eye on sectors others might overlook or companies that haven’t hit the mainstream yet. These early bets in the right space can turn into massive gains as the market catches on.

Conclusion

So, there you have it: seven lessons for finding the next 100-bagger. These kinds of stocks aren’t common, but they’re out there if you know what to look for and have the patience to let them grow. The right company, positioned in a high-growth market, led by committed owners, and equipped with a strong moat and a scalable business model, has the potential to deliver life-changing returns. But it takes more than just finding a great stock. It takes commitment, patience, and a willingness to think long-term.

As you evaluate stocks in your portfolio, keep these lessons in mind. Look for consistent growth, a sustainable edge, and the ability to expand without constantly burning through capital. And remember, some of the best opportunities might be in places others are overlooking.

Investing in a potential 100-bagger is about seeing the big picture. It’s about understanding the journey of the company, from its early days to its potential as a market leader. So, think big, stay patient, and who knows? The next 100-bagger might already be in your portfolio.

Talk to you on Sunday,

Matt Allen

Disclaimer for BeanWealth

BeanWealth is a publisher of financial education and information. We are not an investment advisor and do not provide personalized investment advice or recommendations tailored to any individual's financial situation. The content provided through our website, newsletters, and any other materials is for educational purposes only and should not be construed as financial or investment advice.

All information is provided “as is,” without warranty of any kind. BeanWealth makes no representations or guarantees regarding the accuracy, completeness, or timeliness of the information presented. The opinions and views expressed in our content are those of the author(s) and do not necessarily reflect the views of BeanWealth, its partners, or its affiliates.

Investors should perform their own due diligence and consult with a professional financial advisor before making any investment decisions. None of the information provided herein constitutes a solicitation to buy or sell any securities or financial instruments. Any projections or forecasts mentioned are speculative and subject to risks and uncertainties that could cause actual outcomes to differ.

BeanWealth, its employees, and affiliates may hold positions (long or short) in the securities or companies mentioned, and these positions may change without notice. No guarantees are made regarding the continuation of these positions.

Forward-looking statements, estimates, or forecasts provided are inherently uncertain and based on assumptions that may not occur. Other unforeseen factors may arise that could materially affect the actual outcomes or performance of the securities discussed. BeanWealth has no obligation to update or correct any information after the date of publication.

BeanWealth disclaims any liability for losses or damages, whether direct or indirect, resulting from the use of the information provided. By accessing or using any BeanWealth content, you agree to this disclaimer and our terms of service.

Unauthorized distribution, reproduction, or sharing of this content is strictly prohibited and subject to legal action.

See you on Wednesday!

Cheers,

The Bean Team

Disclaimer for BeanWealth

BeanWealth is a publisher of financial education and information. We are not an investment advisor and do not provide personalized investment advice or recommendations tailored to any individual's financial situation. The content provided through our website, newsletters, and any other materials is for educational purposes only and should not be construed as financial or investment advice.

All information is provided “as is,” without warranty of any kind. BeanWealth makes no representations or guarantees regarding the accuracy, completeness, or timeliness of the information presented. The opinions and views expressed in our content are those of the author(s) and do not necessarily reflect the views of BeanWealth, its partners, or its affiliates.

Investors should perform their own due diligence and consult with a professional financial advisor before making any investment decisions. None of the information provided herein constitutes a solicitation to buy or sell any securities or financial instruments. Any projections or forecasts mentioned are speculative and subject to risks and uncertainties that could cause actual outcomes to differ.

BeanWealth, its employees, and affiliates may hold positions (long or short) in the securities or companies mentioned, and these positions may change without notice. No guarantees are made regarding the continuation of these positions.

Forward-looking statements, estimates, or forecasts provided are inherently uncertain and based on assumptions that may not occur. Other unforeseen factors may arise that could materially affect the actual outcomes or performance of the securities discussed. BeanWealth has no obligation to update or correct any information after the date of publication.

BeanWealth disclaims any liability for losses or damages, whether direct or indirect, resulting from the use of the information provided. By accessing or using any BeanWealth content, you agree to this disclaimer and our terms of service.

Unauthorized distribution, reproduction, or sharing of this content is strictly prohibited and subject to legal action.