Over the last decade, I’ve had numerous ‘multibaggers’ – or stocks that have gone on to rise by multiple times their initial cost – in my ISA and SIPP. Some examples include Nvidia, Apple, Alphabet, Microsoft, Uber, and CrowdStrike.

Looking ahead, I’m hoping to land more big winners for my portfolio. With that in mind, here’s what I look for when searching for potential multibaggers.

I start with revenue growth

The main thing I focus on when looking for stocks that could rise many times over is strong revenue growth. I figure that if a company can grow its revenue three-fold, four-fold, or more in the years ahead, there’s a good chance its share price will rise significantly.

When looking for revenue growth potential, I look at companies’ past revenue trajectories. I like to see annualised growth of 20% over the last few years.

I also focus on companies in growth industries like semiconductors, cloud computing, and cybersecurity. Operating in a growing industry makes it far easier to expand your top line.

I’ll point out that I tend to focus on companies that are listed in the US when hunting for multibaggers. There are growth businesses in the UK, but there are just far more in the US because it’s a much bigger market.

Then turn to valuation

Beyond revenue growth, I also look at valuation. I’m looking for companies that trade at ‘reasonable’ valuations relative to their growth.

I try to avoid stocks that are extremely expensive. Because these stocks could suffer from valuation compression, lowering my chances of seeing a double or triple in the share price.

Quality is important

Additionally, I focus on companies with competitive advantages and strong financials. This ‘quality’ helps me avoid duds.

A future multibagger?

Putting this all together, one example of a stock I own where I see multibagger potential to consider is Zscaler (NASDAQ: ZS). It’s a US-listed cybersecurity company that serves 40% of the Forbes Global 2000 businesses.

This company certainly has a great revenue growth track record. Over the last five years, its top line has grown from $673m to $3,353m – a compound annual growth rate (CAGR) of 38%.

I don’t expect it to continue growing at that rate. But I do expect to see strong growth in the years ahead as businesses spend more on cybersecurity to protect themselves from AI-fuelled threats.

It’s worth noting here that the cybersecurity industry is forecast to grow by around 15% per year between now and 2030. This industry growth should provide significant tailwinds for the company.

As for the valuation, it seems reasonable to me. With analysts expecting earnings per share of $4.85 this financial year (ending 31 July 2027), the forward-looking price-to-earnings (P/E) ratio is about 33.

Assuming the company continues to grow rapidly, I wouldn’t expect to see much valuation compression at that earnings multiple. The valuation (and share price) could come down if growth slows, however.

I’ll point out that I don’t expect Zscaler stock to multibag in the next few months. It could take a few years.

In the long run, however, I do see a lot of potential. I believe this growth stock is worth a closer look.

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Edward Sheldon owns shares in Zscaler, Nvidia, Apple, Alphabet, Microsoft, Uber, and CrowdStrike.