The stock market is a roller coaster of emotions. There are days when your portfolio soars, making you feel invincible, and then there are those dreaded moments where a sea of red figures on the screen can trigger anxiety and self-doubt. In these volatile environments, it can feel like every decision could make or break your gains. So how do professional investors maintain their momentum and deliver consistent returns, even amidst the uncertainty? For many seasoned investors, the secret lies in identifying potential multibagger stocks —investments that have the potential to multiply in value several times over. These gems aren’t easy to find, but by focusing on the right indicators and maintaining a long-term perspective, investors can increase their chances of discovering them.

Finding multi-bagger stocks requires more than just luck; it takes an understanding of key financial metrics, industry trends, and company fundamentals. A strong competitive advantage, robust financial health, and a clear path to growth are just some of the qualities to watch for. As an intermediate investor, knowing which factors to prioritize can make all the difference, helping you navigate the market’s ups and downs with greater confidence. Below, we’ll explore three essential elements to look for when searching for potential multibaggers on the ASX Stocks list and highlight two standout stocks that currently show promising potential to deliver strong returns.

1. Focus on Value

Value isn’t just about a stock’s price but its true worth relative to its price. Value investing is a time-tested approach that goes beyond market timing or technical signals. When a company is undervalued, it means you’re buying something worth more than what you paid, which reduces downside risk and sets the stage for strong returns. Even companies with less-than-stellar financials can deliver impressive returns when bought at a discount. Remember, value doesn’t necessarily mean low price—it means getting more than you’re paying for.

2. Prioritize Stability

Once you’ve ensured you’re buying value, stability is the next factor to consider. Stable companies tend to weather downturns better, giving you peace of mind and allowing for consistent growth over time. These companies often have resilient business models, steady cash flows, and strong management, which helps them survive economic turbulence. In a multi-bagger search, stability allows you to ride out market fluctuations and hold onto your investment long enough to reap those compounding gains.

3. Look at the Industry Potential

Industries with solid future growth potential are hotbeds for multi-bagger opportunities. Sectors like artificial intelligence, clean energy, and tech-enabled services are primed for disruption and expansion, meaning companies in these spaces often benefit from both structural demand and investor interest. Investing in companies within high-growth industries helps amplify returns, as these businesses are positioned to capitalize on emerging trends and shifts in consumer and business demands.

2 ASX Stocks with Multi-Bagger Potential

1. Webjet Limited (ASX: WEB)

Sector: Travel and Tourism

Value Proposition: Pandemic Recovery and Growth in Online Travel

Webjet Limited, a prominent online travel company, has shown remarkable resilience and growth potential. As travel demand continues to rebound post-pandemic, Webjet is positioned to benefit from increased online travel bookings and consumer reliance on digital travel platforms. The company has taken steps to streamline operations and focus on profitability, with a leaner cost structure than pre-pandemic, helping drive margin improvements.

Moreover, Webjet has expanded into new markets, such as North America and Europe, giving it significant room for growth as global travel demand rises. With a strong balance sheet, scalable business model, and a competitive edge in the online travel space, Webjet could see substantial upside as the travel industry stabilizes and grows over the next few years.

2. Pilbara Minerals (ASX: PLS)

Sector: Lithium Mining and Clean Energy

Value Proposition: Capitalizing on the Lithium Boom

As a lithium mining company, Pilbara Minerals stands to benefit from the surging demand for lithium, driven by the electric vehicle (EV) and renewable energy markets. Lithium is a critical component in battery technology, and the global shift toward clean energy has created a massive demand surge for this resource. Pilbara Minerals has established itself as a low-cost producer with significant reserves, positioning it well to capitalize on this trend.

In addition to high lithium demand, Pilbara Minerals is pursuing strategic partnerships and expansion projects to increase its production capacity. The company’s strong operational performance, growing production volume, and ability to scale its operations make it a compelling candidate for multi-bagger status. With global support for clean energy only expected to grow, Pilbara Minerals is well-placed to ride this wave for the foreseeable future.

Final Takeaway

Finding multi-bagger stocks is never easy, but focusing on value, stability, and growth potential can narrow the field and increase your chances of success. Webjet and Pilbara Minerals each exhibit these qualities and represent solid opportunities for ASX investors looking to add high-potential stocks to their portfolios.

While no investment is without risk, following a strategy rooted in these principles will help you stay level-headed in both bull and bear markets. Remember, patience is key—multi-baggers don’t happen overnight. But with the right stocks, you could see substantial growth in your portfolio over time.