Stocks That Double Every Three Years

Why is it that certain companies build up a reputation of consistency in terms of wealth generation? Some of the common traits include a scalable portfolio of established brands, superior brand equity, well-spread distribution networks, strong supply chain, aggressive marketing strategy, responsive customer setup, and so on. Armaan Madhani brings into the limelight some of these top performers and the reasons for their strong brand visibility

- Armaan Madhani

To quote James Clear, an American author who is best known for his book ‘Atomic Habits’, “I accumu-lated small but consistent habits that ultimately led to results that were unimaginable when I started.” It’s the most fundamental fact of life that consistent actions create consistent results. With the wild swings of volatility in the stock markets experienced by equity investors on a regular basis, consistent performance by businesses enables one to heave a sigh of relief. Looking back at past returns, it doesn’t take much to figure out that there is a small cluster of companies that have been able to consistently compound wealth and generate substantial alpha.

In this way they have been outperforming their peers and the broader markets by a huge margin in the long run. Upon back-testing all stocks listed on the bourses for returns over the past decade, it was found that there are 21 companies with current market capitalisation of more than ₹5,000 crore whose stock price has consistently doubled every three years. The table alongside summarises the same. On probing further it was found that there are certain characteristic traits that are common among such breed of companies, which skew the odds in their favour by empowering them with formidable barriers to entry.