A Step-By-Step Framework For Finding The Next Stock With 100x Investment Returns
Step 1: Idea Sourcing—Where To Dig
Neglected exchanges. Look at OTCQX, Canadian
Venture, AIM. Institutional ownership is minimal.ETF orphans. Passive funds skip illiquid insider
controlled names, leaving bargains behind.Spin-offs & reverse mergers. Often lack analyst
coverage yet inherit proven assets.
Step 2: Hard-Screen Pass
Market cap <$300m (smaller seeds sprout faster).
ROIC >15 %, gross margin >40%.
Three-year revenue CAGR >15% (organic).
Net-debt/EBITDA <1× or net-cash.
Insider ownership ≥10%.
A free screener such as StockAnalysis shows 1,102 U.S. micro-caps between
$50–$300m today. Applying rules 2-5 usually leaves < 75 tickers.
Step 3: Qualitative Deep-Dive
Moat Check. Does the firm command IP, network effects, or regulatory barriers?
Unit Economics. Rising gross margin with scale = true pricing power.
Capital Cycle. Avoid sectors needing constant cap-ex (airlines, miners).
Management DNA. Study Form 4 filings: do insiders buy dips? Do letters focus on per-share compounding?
Step 4: Valuation Discipline
Even great businesses can be poor 10× bets at IPO hype prices. Target:
EV/FCF under growth rate (e.g., 20% FCF growth → pay ≤20×).
PEG <1.5 on forward estimates in niche leaders.
Remember Mayer’s warning: “Price must be favorable” — SQGLP’s final letter.
Looking for the best Monopoly ETFs to invest in?
Check out Monopoly Hunters’ Top Monopoly ETF page on our website to learn about the different monopoly and oligopoly ETFs and what each one has to offer.
Looking for a way to track your investments (in one place)?
Visit Monopoly Hunters’ Free Resources page to download our Ultimate Investment Tracker. It’s free and lets you track all your investments in a single Google Sheet.