I'm worried about my old age, so I started investing in stocks DAY105 [11 Conditions for Ten-Bagger Stocks (Part 2)]

—Walking with Haru, Investment Record at Age 60, Day 105—The Remaining Five

DAY104 covered 6 of the 11 conditions. Today, we cover the remaining 5. Finally, we have them all.

〈The strength of getting paid in advance〉

The 7th condition was a guarantee-type business.
This refers to a system where money is received upfront at the time of contract, such as rent guarantees or mortgage guarantees.

When I asked, I was told this is also a type of stock-based business.
As long as the contract balance accumulates, sales and profits also accumulate.
Moreover, since you receive the money in advance, it seems easier to have flexibility in cash flow.

🌸 Me: "I'd never thought about getting paid in advance, but now that you mention it, it's a very strong system."

〈I've heard this story before〉

The 8th condition was to narrow down the industry to information and communications or services.
The 9th condition was to use a market capitalization of roughly under 20 billion yen as a guideline (it is said that 80% of companies that achieved ten-bagger status in the past had a market capitalization of under 10 billion yen at the time of listing).

These two were actually almost the same as what I heard on DAY103.
When I think about it, it's natural, as both are based on the same Nikkei newspaper data.
This means the same evidence was listed again as a separate condition within the list of 11. By hearing the same story twice, the numbers themselves stuck in my head better than before.

〈The president is also a shareholder〉

The 10th condition is that the founding president is a major shareholder.

If the founder themselves holds a large amount of the company's stock, rather than a salaryman president, they are less likely to be swayed by the opinions of other major shareholders, making it easier to make management decisions.
And since the president is also a shareholder, the desire to raise the stock price is more likely to align with the direction of management itself.

🌸 Me: "People whose interests are aligned are strong, after all."

〈Don't buy stocks that are too expensive〉

Finally, the 11th condition was PER (Price-to-Earnings Ratio). No matter how good the business model is, stocks with a PER exceeding 40x have a high risk of falling.
The advice was that it is desirable to buy at 20x or less if possible.

〈11 conditions, all complete〉

Counting from DAY103, all 11 conditions have finally been laid out.
Looking at them all lined up again, none of them are particularly difficult on their own.
However, I believe that looking at stocks while keeping all of these in mind versus looking at them without knowing them will surely change what catches my eye.

During the lecture, actual example companies that met many of these conditions were also introduced.
It's a company involved in rental housing-related businesses that also possesses the nature of a guarantee business, and its stock price has already quadrupled not long after its IPO.

💬 Satsuki's questions and Haru's answers

🌸 Me: "With 11 conditions, I feel like it's impossible to remember them all. What should I do?"

<What I understood best today>
There are 11 conditions. But the underlying concepts are not that many.

I will continue tomorrow.

📚 Click here for related articles for DAY105
DAY104 [Ten-bagger stocks, 11 conditions (1)]
DAY103 [The option of IPO secondary investment]
DAY55 [Specific procedures for stock selection]
DAY56 [Practical visual screening: Kusuri no Madoguchi]

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