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10 Bagger Stocks

Updated on November 16, 2010

10 Bagger Stocks

The world of investment jargon is convoluted and sometimes a little confusing, and quite honestly many people shy away from the subject of investing for that very reason. Terminology such as “P/E ratio” or “par value” or other terms all carry a certain “mystique” that sounds intriguing enough to an untrained ear, and can even be intimidating to a beginner, but when you actually begin to “crack the code” so to speak, it’s really all kind of simple. One such phrase in the stock investing world is “10 bagger stocks”. Again, some of the “stock-speak” you hear seems specifically designed to keep the outsiders out and the insiders in, and many times that fact alone succeeds by intimidating people enough to keep them away from the subject of investing in stocks altogether. For those who may be unfamiliar with penny stocks in particular, they are basically a whole microcosm of the stock market world, with the primary characteristic being that they are usually priced below $5.00 per share (which is a debatable number according to some). The very phase “penny stock” came into common use due to the fact that it cost “pennies” to buy the stocks. The downside to these types of stocks is that they can be very unstable in their price movements, and the companies that these stocks represent can sometimes be either in trouble or on shaky ground, or they can be startup companies that have not yet developed enough market capitalization to be “big players” in their particular sector. Sometimes they can be formerly large companies that “fell from grace” for one reason or another (auto company bailouts, anyone?), and have a depressed price as a result of some type of “hot water” they got into.

Image courtesy of Google Images
Image courtesy of Google Images

Ten Bagger Stocks

So back to this term “10 bagger”. There is talk that the phrase “10 bagger” actually came from the world of baseball, and it denoted the type of situation in a game where a player would hit a home run with the bases loaded, thus enabling all three players on the bases, plus the batter, to bring it on home. This was called a “four bagger”, because as many of you may already know, the bases in baseball are also called “bags”. So in a loose translation into the stock investing world, the phrase “ten bagger” came to mean a stock that literally increased in value ten times over. For example, if a stock were trading at $1.00 per share, for it to become a “ten bagger”, it would have to have a dramatic price increase up to $10.00 per share ($1.00 x 10). So that’s really the basic meaning of a “ten bagger”, is any investment that has potential of becoming ten times as valuable as it currently is. Just take the asset’s current price and multiply it by ten, and you’ve got yourself a ten bagger projection. The ten bagger is not an uncommon thing, especially when you’re dealing with stocks that trade for less than 50 cents per share and the like. Just think…a stock that’s currently trading at just 1 cent per share moving up to 10 cents per share is not too far outside the realm of reality in the penny stock trading world. Ten baggers happen quite often in penny stocks, and although they can bring fantastic returns, you have to be aware of the risks as well. Just as easily as it can go from 1 cent per share to 10 cents, it can also go from 10 cents to 1 cent. So, leverage is always a very sharp two-edged sword. That’s all for now…hope I brought some clarity to what the phrase “10 bagger stocks” means.


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    • john000 profile image

      John R Wilsdon 4 years ago from Superior, Arizona

      Very clear explanation of the "10 bagger". I remember Peter Lynch was especially fond of the term "bagger". He could go on talking about stocks and throw out 3 bagger, 4 bagger, and, "Oh, a 5 bagger, not bad!" The only time I have gotten a 10 bagger is when I went to the grocery store!

      Voted up, and thank you.