FORMULA: How To Find Small Cap Stocks That Will 10x
Dear fellow investor,
I've started looking at small caps in my research process and started with the MSCI World Small Caps Index. If you want to check my notes on the first 50 in the index you can do that here: 1 to 50 Small Cap Stocks
By researching the top stocks on the list, which are usually the best performing stocks in any index, I didn't find much to invest in, but I found a pattern for what to look for.
Good stable businesses that 2x their revenues, 3x or 4x their EPS or dividends over 10 years, are likely to get a valuation expansion of 2x or more, that leads to a 10x return over 10 years - which is 23.6% per year. Not bad and not that complex. Here is a video discussing this more in detail.