Modern 10-Baggers Guide
Modern 10-Baggers Guide
GUIDE TO MODERN
10-BAGGERS
How to find the next
1,000% gainer without
getting lucky
By Stephen McBride and Dan Steinhart
The ultimate guide to modern 10-baggers
2. The best 10-baggers share a handful of traits. We call these traits the “Core 4.” Less
than 1% of stocks possess all four of these traits.
They don’t all become 10-baggers. But for the ones that do, a 1,000% gain is often
only the beginning. The average overall gain among the “true” 10-baggers we’ve
identified is 6,768%.
3. There are two reliable ways to find 10-baggers. One approach involves timing the
market. The other approach does not. We’ll show you both. We greatly favor the
latter.
This research project was inspired by the great Peter Lynch. He coined the term
“10-bagger.” He also popularized a way of finding them called “GARP” investing, or Growth
at a Reasonable Price.
The basic premise: find fast-growing companies that can sustain revenue growth, are
profitable, and aren’t overvalued. Do this, and your odds of finding a big winner skyrocket.
Peter Lynch’s performance as head of the Magellan Fund was legendary. His track record
rivals even Warren Buffett. Buffett beats Lynch on longevity, having posted compound
returns of 20% over about 50 years. But Lynch achieved much higher returns overall,
having generated 29.2% for 13 years.
At that rate of return, $10,000 turns into $596,176 in 13 years. But unfortunately for
investors in Lynch’s mutual fund—and for the investing world as a whole—he then exited
the game. Lynch retired at age 46. He had made plenty of money and wanted to spend
more time with his three daughters.
If Lynch were investing professionally today, how would he change his approach to find
modern 10-baggers? That’s the question we set out to answer.
Methodology
We used various data sources, including Polygon.io, Financial Modeling Prep, and Yahoo
Finance.
We also used premium artificial intelligence (AI) systems to gather, parse, and cross-check
the data. All in all, we had to sort through several million data points.
Prior to the debut of ChatGPT and generative AI in November 2022, this would have been
impossible without a team of data scientists and coders. Most people don’t yet realize what
a gamechanger AI is for sophisticated financial research.
We seem to be in a special window right now where a small team that leverages AI can get
results that used to require the resources of a hedge fund.
Beyond that, we used a combination of AI and human analysis to classify the 10-baggers
and ultimately zero in on the Core 4 traits that tend to be shared by true 10-baggers.
First, we cast the widest possible net. We looked at every stock’s monthly closing low and
high prices since 2004, and we calculated which ones achieved 10-bagger status at any
point.
There were roughly 5,000 publicly-traded US stocks in the last 20 years, depending on how
you count. We found 1,651 stocks that produced 1,000% returns at any point in the
last 20 years.
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ck
Surprised there were that many 10-baggers? Well, did you know the whole S&P 500 has
gained 1,000% since the financial-crisis bottom in 2009?
We found hundreds of stocks that technically gained 1,000%+. But you would’ve had to
have uncommonly lucky timing to actually collect that level of return.
Our goal was to arrive at a framework for finding 10-baggers that doesn’t rely on luck or
timing the market. So, we whittled down the list by eliminating the following 10-baggers:
1. Penny stocks.
2. Stocks in highly cyclical sectors and/or those that depend on commodities prices to
thrive, such as most energy and mining stocks. While it’s possible to 10X your money
in short order on a gold stock, doing so requires great timing, luck, or both.
3. Stocks in highly speculative sectors that depend on binary outcomes, like biotech.
While there’s ample opportunity to 10X your money in biotech, it requires
specialized knowledge and connections. And a willingness to bet on binary events
like FDA approvals.
4. Other “flash in the pan” stocks that hit 10-bagger status but failed to maintain it.
The 2020/21 bubble produced a lot of these. GameStop (GME), for example, shot
from under $1/share to over $80/share—a 7,900% gain in under one year. But it
came back down almost as quickly, as there was no fundamental backing to this
meme stock.
GameStop (GME)
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25
Tesla (TSLA)
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
Finding #3: Buying during a crisis can give you 1,000% returns
Since it was such a tough time for financial markets, thousands of individual stocks
bottomed during these years. Hundreds then went on to produce 1,000% returns, primarily
because their starting prices were so low.
This category of 10-baggers is full of companies in sectors that were hit hardest during the
financial crisis: banks, homebuilders, automakers, and real estate. Look at Ford (F), as an
example. It bottomed in 2009 under $2/share. It technically became a 10-bagger in 2022
when it briefly reached over $20/share.
But no one would mistake Ford for a growth stock, let alone a high-quality one. We
excluded stocks like Ford from our analysis.
That said, many high-quality stocks also posted 10-bagger returns from 2008–2009. We
created a special category for them called “2008/09 survivors.” These are distinct from
companies like Ford and managed to 10X off their 2008/09 bottoms despite having
nonexistent growth.
Instead, they’re quality companies that traded for dirt cheap in 2008/09. You could’ve
made 10X, 20X, or 30X your money buying them near the bottom. Companies in this group
include names like Caterpillar (CAT), Delta Air Lines (DAL), and Deere & Co. (DE).
Nothing wrong with these stocks. They were great investments if you bought them
anywhere near the incredibly low prices presented by the financial crisis. But they’re not
the kind of 10-baggers we’re looking for.
At the start of this report, we promised to show you two reliable ways to make 10X your
money in an individual stock. You just learned the first: Buy high-quality stocks during a
crisis. Time will take care of the rest.
Of course, this is just another form of timing the market. Our goal was to build a
framework to find stocks that can 10X without getting lucky or timing the market.
So, we removed the “2008/09 survivors” from our primary data set.
After removing all the false 10-baggers, here’s the full picture:
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ck
to
Ss
125 2008/09 Survivors
gU
in
lify
Those 347 true 10-baggers at the top of the pyramid are the focus of the rest of this report.
Next, let’s look at the Core 4 traits they tend to have in common.
“Growth stocks are rarely cheap. You’re paying for future earnings, and the good ones are worth
it.”— Peter Lynch
Lynch greatly preferred profitable stocks. He rarely touched unprofitable ones. His original
criteria required a company to have minimum earnings growth of 20% per year. Earnings is
another word for profits.
Of all the ways the market has changed since Lynch’s time, this is probably the biggest.
These days, many companies—especially technology companies, where 10-baggers are
most heavily concentrated—pursue a “grow now, profit later” approach. They do this
because it works!
Tesla (TSLA), for example, didn’t turn profitable until 2020. Yet its stock had already
become a 41-bagger by then, soaring 4,100%+.
There are many, many such examples among the greatest stocks of the last 20 years.
Amazon (AMZN) wasn’t consistently profitable until 2015. Its stock was already up 36,567%
by then (a 365-bagger!)
Shopify (SHOP) didn’t turn a profit until 2020. Its stock had already appreciated by 6,200%.
See the pattern? Today’s fastest-growing companies that produce the biggest stock price
gains are often unprofitable or barely profitable. We’ll discuss profitability more in Trait #3.
What these companies did have was rapid and consistent revenue growth. Look at how
fast, and how consistently, these companies grew revenue before they reached consistent
profitability:
10 140% 27%
9 55% 29%
8 158% 31%
7 150% 32%
6 114% 32% 105%
5 51% 36% 98%
4 54% 36% 86%
3 74% 30% 74%
2 52% 23% 59%
1 39% 21% 63%
Our analysis indicates that rapid, consistent revenue growth is the #1 predictor of
10-bagger returns. We measured the revenue growth of our true 347 10-baggers using a
three-year compound revenue growth rate (CAGR). The results are telling.
The average growth was 22% in the year their run began and 38% within a four-year
window of when their run began.
The S&P 500 as a whole has a long-term revenue growth rate of about 5%.
So, depending on how you count, these 10-baggers grow around 5X–9X faster than a typical
company:
30%
25%
20%
15%
10%
5%
0%
S&P500 10-Baggers
© RiskHedge
Tesla hit the highest revenue growth of all, exceeding 1,000% at the start of its run in 2010.
It maintained blistering growth all the way through 2018, never dropping below 50%. It was
never profitable in all this time… yet its stock is now up 31,900%.
Below is a snapshot of the 10-baggers that achieved a three-year CAGR of over 100%
during their run—a rare feat. Many are well-known, great stocks like Alphabet (GOOG),
Salesforce (CRM), Meta Platforms (META), and Shopify.
Moderna (MRNA) is the most recent entrant. It had some of the most explosive revenue
growth ever recorded for a public company when it rolled out its COVID vaccine.
To call these 10-baggers is an understatement. The average was a 74-bagger, and the
median was a 36-bagger.
Of course, these are the best of the best—extraordinary companies that posted
extraordinary gains.
The common thread is they all grew revenue very, very fast… and sustained that growth for
years.
You’ll also notice that 59% of these companies were not profitable at the start of their run.
More on that in Trait #3.
True 10-bagger Trait #2: Small at the start… but not too small
“The size of the company has a lot to do with how much room it has to grow. It’s hard for a
$50 billion company to grow much, but a $500 million company can double in size relatively
quickly.”—Peter Lynch
Peter Lynch liked smaller stocks. “Small” in his time was generally under $1 billion in market
cap.
Of the 347 10-baggers we studied, the average market cap at the start of their run was $3.3
billion. For context, that’s roughly 1/1,000th the size of Apple (AAPL) today. The median
was a bit smaller at $750 million.
The idea here is simple: Smaller companies have a lot more room to grow fast. A $5
billion company can gain 2,000%, 3,000%, 4,000%, or more without breaking a sweat. It’s
mathematically impossible for a $500 billion company to do the same.
When you wade into tiny micro-caps, you start dealing with pre-revenue companies.
Although they don’t make any money, they tend to burn a lot of it paying expenses. True,
there are gems among these stocks. But they’re unpredictable. Often, these are lottery-
ticket startups or biotech science projects that have long odds of working.
73% of the 10-baggers we identified had a starting market cap between $200 million and
$20 billion. We believe this is the “sweet spot” for future 10-baggers.
This criteria excludes all companies in the S&P. Currently, the smallest S&P company,
American Airlines Group (AAL), has a market cap of about $20 billion.
Here’s a sampling of the starting market caps and overall gains of five well-known,
extremely successful growth stocks:
If you’re wondering how this translates into share price… the median 10-bagger had a
share price just under $15/share. 215 of the 347 stocks had a share price under $20/share.
As mentioned, Lynch usually insisted on buying profitable stocks. In his time, that was a
viable way to find 10-baggers. Today, the “grow now, profit later” approach of many of the
fastest growers requires us to expand our horizons.
We showed you earlier how Tesla, Amazon, Shopify, and many others gained thousands
of percent before they were consistently profitable. That doesn’t mean profitability isn’t
important. No company can succeed if it doesn’t eventually turn a profit.
The key question to ask when evaluating an unprofitable growth stock: Why is it
unprofitable?
If the answer is it’s pouring all its cash and then some back into growth, that’s a good start.
If the company could be profitable now but chooses not to be in order to grow fast, that’s
also a good sign.
In short, you want to buy growth stocks that are forgoing profits now in order to earn much
bigger profits in the future.
Meta (formerly Facebook) didn’t worry early on about how to monetize its gargantuan
user base. It just gathered as many users as possible and used its 3 billion+ userbase to
dominate social media.
Amazon didn’t worry about turning much of a profit early on. Instead, it first invested in
building out its e-commerce dominance. Then, it built out its logistics network and its
Amazon Web Services (AWS) cloud platform, which eventually became its main profit
engine.
Or consider Roku (ROKU). The connected-TV pioneer was unprofitable in eight out of nine
years since it’s been public. But 90 million households now use Roku. Its revenue grew 32%,
41%, 51%, 55%, and 40% from 2018–2022. Its stock has appreciated over 2,150%.
• Calculate how much of a price hike would be required to make the company
profitable.
• Look at exactly how unprofitable it is. Is it deep underwater, or could it easily turn
on the profits with a few tweaks?
At RiskHedge, we use our proprietary “Real Cash Flow” metric to measure a company’s
profitability while stripping out any accounting fictions. But that is beyond the scope of this
report.
Across our data set, 66% of our 347 10-baggers were profitable one year into their journey.
This rose to 83% three years in, and 91% were profitable by 2023.
This shows that current profitability isn’t always all that important. What’s important is that
the company can become profitable eventually, after it’s carved out a dominant market
share.
Other takeaways:
During big market dislocations, it pays to tilt your analysis toward profitable companies. In
other times, profitable future 10-baggers can be scarce, and revenue growth tends to rule.
Here’s a look at the 10 fastest 10-baggers. They all handed out 1,000% gains in 1.5 years or
less. Eighty percent of them were unprofitable:
Lastly, the proportion of 10-baggers that were profitable at the beginning of their run has
been steadily declining as the market has grown more sophisticated. In the early 2000s,
over 80% of future 10-baggers were profitable. Now, it’s around 50% or less:
“The best way to find great investments is to look around and see what’s changing in the way
people live and work.”—Peter Lynch
Peter Lynch was a chameleon who succeeded with many different investing styles. But he
was best known for getting investment ideas by looking at the world around him, and by
trusting his own personal experience.
Lynch invested in Walmart (WMT) (30-bagger) because he saw new stores popping
up, knew it only had 18% of the US market, and had a scalable business model. He first
invested in Dunkin Donuts (DNKN) because he read about it in a newspaper, liked its
coffee, and saw stores being built around Boston, where he lived.
That kind of obvious retail growth is in the past now. What would Lynch see today if he
were investing professionally? The answer is obvious: technological disruption.
AI, self-driving cars, miracle drugs like Ozempic, quantum computing progress, Ubers,
Airbnbs, streaming TV, Amazon packages, drones, self-driving cars. The list goes on. The
world is changing before our eyes, and the signs are all around us.
Here’s a look at the sectors where past 10-baggers came from. Technology is the #1
10-bagger breeding ground:
10-Baggers by Sector
Technology 129
Industrials 109
Consumer Cyclical 70
Healthcare 53
Financial Services 50
Basic Materials 22
Consumer Defensive 18
Communication Services 10
Real Estate 10
Energy 5
Utilities 3
Keep in mind, this significantly understates the importance of technology. That’s because
when many tech companies reach a certain level of success, they get reclassified into
different sectors.
Meta, Google, and Netflix (NFLX) are considered to be in the “communications sector.”
Amazon and Tesla are “consumer cyclical.”
Let’s be real—these are tech stocks. Tech stocks that disrupted and reshaped entire
industries. In some cases, they took over entire industries.
Technically, 10-baggers can come from anywhere. But they’re most abundant in the
technology sector, by far. Technology dominates 10-baggers because technology is simply
“what’s new.”
Remember, these are companies disrupting old markets or creating new ones. The biggest
winners are often the ones that can grow the fastest and capture the biggest share of a
lucrative new market.
A platform technology is the foundation of an industry or a whole new way of doing things.
It often provides the infrastructure or ecosystem that enables other entities (such as
developers, businesses, or users) to create, interact, and grow.
1. Foundational: They’re the “base layer” for other technologies and businesses.
2. Scalable: They can grow extremely fast without too much additional investment.
1. eXp World Holdings (EXPI): Created an online platform for real estate agents that
eliminated the need for expensive overhead. It was one of the fastest 10-baggers
ever, gaining 2,619%% from 2018–2021.
2. Moderna (MRNA): Created the mRNA platform that allows scientists to develop
new medicines and gained 4,211%.
4. Shopify (SHOP): Created the world’s most successful online small business platform
and rose 9,429%.
5. Apple (AAPL): Created the worldwide market for smartphones—the biggest new
platform technology of the last 20 years. It gained 23,545%.
6. Netflix (NFLX): Created the #1 streaming platform and cemented itself as one of
the best performing stocks of all time, up 74,054%.
7. Adobe (ADBE): Created the #1 creative platform: Its stock rose 4,356%.
9. The Trade Desk (TTD): Created a data-driven online ad-buying platform. Its stock
went up 6,333%.
10. Meta Platforms (META): Created the #1 social media platform and rose 3,538%.
11. Palo Alto Networks (PANW): Created a foundational platform for cybersecurity
and rallied 3,083%.
12. Cloudflare (NET): Also created a foundational platform for cybersecurity. In the
biggest, fastest-growing industries, there’s room for multiple 10-baggers. In this
case, NET climbed 1,429%.
14. Microsoft (MSFT): Created the ultimate platform with Microsoft Windows. And the
stock rose 3,050% since the mid-2000s.
But a company need not create a platform technology to see big gains in its stock
price. Dozens of companies have achieved great success by piggybacking off platform
technologies created by others.
Smartphones enabled Meta, Uber (UBER), and Airbnb (ABNB), and dozens of others.
Netflix’s pioneering of streaming created opportunities for targeted ad companies like The
Trade Desk.
Amazon pioneered e-commerce but spawned dozens of competitors, including Shopify and
Wix (WIX)—both of which became 10-baggers.
AI will require many different platforms, several of which are already in development.
Opportunities abound.
#2: Has a market cap above $200 million but below $20 billion. Share prices tend
to be under $20/share.
We mentioned that Peter Lynch achieved extraordinary returns during his 13-year career,
beating even Warren Buffett.
By the end of Lynch’s career, he managed billions of dollars. Had he continued to manage
money, his returns probably would’ve reverted to the mean a bit. The more money you
mange, the harder it is to make outsized returns. Lynch said so himself:
This illustrates a key advantage held by individual investors: They don’t need to worry about
turning $10 billion into $100 billion. Turning $5,000 into $50,000 or $100,000 will suffice.
That’s achievable when you follow the Core 4 traits demonstrated here.
Finally, remember why we invest in the first place. Lynch retired at 46, allegedly saying
he had memorized 2,000 P/E ratios but missed his daughter’s birthday.
We all want enough money to be able to make these kinds of choices. You only have to
get rich once—and catching just one 10-bagger can make a real difference in getting there
faster.