**[Updated: 01-Mar’2020]** In this blog post you will see a list of stocks which gave highest return in last 10 years (bottom of the post). But what is interesting about my list of stocks is the **consistency** of their returns.

How their consistency of returns is measured? First we will review this methodology, and then we will discuss about the ‘highest return stocks’.

Imagine that there is an investor who bought a stock of XYZ company, 10 years back. He has held on to this stock till today.

During this holding time, he has measured its returns in the following time horizons (like last 10 years, last 5 years etc):

- 10 Years (A% say).
- 5 Years (B% say).
- 3 Years (C% say).
- 1 Year (D% say).
- 3 months (E% say).

Suppose, the stock XYZ has given positive returns in all the above periods. Moreover, to quantify the magnitude of “overall return”, the person has used the following formula:

Overall Return = (A+B+C+D+E) / 5

When the investor calculated the overall return of his stock XYZ as per the above formula, the value came out to be **60.3%**.

Now, to understand the significance of a the overall return value of 60.3%, lets take few examples.

*It will help us to see the list of highest return stocks, in a perspective of return generated by these example stocks.*

### Example 1: Overall Return of TCS

TCS is number two stock of Indian stock market in terms of market capitalization (M.Cap = Rs.8.08 Lakh Crore). It is one of those stocks which has ensured great shareholders returns in last 10 years.

But in terms of our metric of ‘overall return’, how TCS has performed? Allow me to present you the return data of TCS, and then we will calculate its “Overall Return”.

- 10 Years (
**29.84% p.a.**). - 5 Years (
**14.05% p.a.**). - 3 Years (
**19.83% p.a.**). - 1 Year (
**22.46% p.a.**). - months (
**5.03% p.a.**).

Overall Return (TCS)= (29.84+14.05+19.83+22.46+5.03) / 5 =18.24%

Compare the overall return of TCS (**18.24%**) with that of XYZ (**60.3%**). Inspite of TCS being one of best stocks of Indian stock market, still its overall return is not even close to our theoretical stock XYZ.

### Example 2: Overall Return of Hindustan Zinc

Hindustan Zinc is again one of the prime stocks of Indian stock market. Being in the metal space (non ferrous), its nature of business is very capital intensive. Inspite of this fact, this company has managed to remain debt free for a prolonged period of time.

What attracts attention towards Hindustan Zinc is also its huge bottom line (Rs.9,200 Crore). Being in Non-Ferrous sector, its PAT Margin and ROE stands at 34.7% and 27.8% respectively. These numbers make it one of the most profitable companies in metal sector.

How Hindustan Zinc has performed in terms of our metric of “overall return”?

- 10 Years (
**18.92% p.a.**). - 5 Years (
**16.66% p.a.**). - 3 Years (
**16.62% p.a.**). - 1 Year (
**-11.44% p.a.**). - 3 months (
**7.43% p.a.**).

Overall Return (H.Zinc)= (18.92+16.66+16.62-11.44+7.43) / 5 =9.63%

Compare the overall return of Hind. Zinc (**9.63%**) with that of XYZ (**60.3%**). No matter how profitable is the business of Hindustan Zinc, it still could not give a return like XYZ.

### Example 3: Overall Return of Asian Paints

In India, Asian Paints is the biggest paint manufacturer. In TTM basis, total revenue of Asian Paints stands at Rs.19,000 Crore. The closest rival of Asian Paints is Berger Paints. It TTM revenue is Rs.6,500 Crore.

Even in terms of Profitability, Asian paints is way ahead of its closest rival Berger. PAT Margin and ROE of Asian Paints is 13% and 24% respectively. PAT Margin and ROE of Berger is 9% and 20% respectively.

Let’s see how Asian Paints has performed in terms of our metric of “overall return”?

- 10 Years (
**32.05% p.a.**). - 5 Years (
**22.95% p.a.**). - 3 Years (
**18.16% p.a.**). - In last 1 Year (
**19.21% p.a.**). - In last 3 months (
**-1.28% p.a.**).

Overall Return (A.Paints)= (32.05+22.95+18.16+19.21-1.28) / 5 =18.21%

Compare the overall return of Asian Paints (**18.21%**) with that of XYZ (**60.3%**). Asian Paints almost operates like semi-monopoly business in India, but still its overall return could not match XYZ.

## Significance of Overall Return

Why we should give importance to the overall return? Because a stock which is showing a high overall returns had provided more buy opportunities (with potential to give high returns) to their investors. How?

Let’s take example of XYZ to get a feel of the significance of overall returns. But before that, allow me to disclose the real name of XYZ. It is “Vinati Organics”.

This is a mid cap stock with market capitalization of Rs.9,700 Crore. It’s overall return is as below:

- 10 Years (
**58.97% p.a.**). - 5 Years (
**46.16% p.a.**). - 3 Years (
**60.10% p.a.**). - In last 1 Year (
**116.05% p.a.**). - In last 3 months (
**20.41% p.a.**).

Overall Return (Vinati)= (58.97+46.16+60.10+116.05+20.41) / 5 =60.3%

How high overall return of Vinati Organics makes it a good stock for investing?

**10 Years**: Suppose a person bought Vinati Organics 10 years back. If he sells it today, his annualised return will be 58.97% p.a.**5 Years**: Similarly, suppose a person bought Vinati Organics 5 years back. If he sells it today, his annualised return still will be 46.16% p.a.**3 Years**: Suppose a person bought Vinati Organics 3 years back. If he sells it today, his annualised return still will be 60.10% p.a.**1 Year**: Similarly, Suppose a person bought Vinati Organics 1 year back. If he sells it today, his annualised return will be a whopping 116.05% p.a.**3 Months**: Suppose a person bought Vinati Organics only 3 months back. If he sells it today, his annualised return still will be 20.41% p.a.

So generally speaking, Vinati Organics has given at least 5 great opportunities to its investors to buy its stocks. This is what made stocks like Vinati a great buy for its investors.

## Conclusion

Vinati Organics has not been the only stock which has given such stellar returns in the past. There are more such stocks.

Moreover, Vinati Organics has been a stock operating in Mid Cap space. There are also large cap stock which has given similar returns. Will it not be fantastic to get our hands on such a stock list? We will see this list of high return stocks now…

#### How an investor should treat these stocks?

I will tell you how I do it. I keep a list of such stock in my special watchlist. Whenever market price of these stocks corrects itself by more than 5-6%, I make a point to do its stock analysis.

How I analyze such stocks? By using my stock analysis worksheet.

Why stock analysis is essential? To reconfirm that whether the business fundamentals of the stock is strong enough or not.

## List of highest return stocks in last 10 Years

**(Updated: 01-Mar’2020)**

**M.Cap**– Market Capitalisation (Rs.Crore).**R.1Y**: Return in last one year (%).**R.5Y**: Annualised Return in last five years (% p.a.).

SL | Company | Size | M.Cap | R5Y | R10Y |

1 | Berger Paints | Large | 54,941.90 | 28.53 | 39.75 |

2 | Bajaj Finance | Large | 2,70,447.16 | 61.17 | 65.38 |

3 | Pidilite Industries | Large | 76,966.23 | 22.21 | 31.40 |

4 | SRF | Mid | 22,466.69 | 32.71 | 36.14 |

5 | Johnson Controls (Hitachi) | Mid | 7,643.90 | 19.20 | 32.59 |

6 | Atul | Mid | 15,180.87 | 31.62 | 50.48 |

7 | Transpek Industry | Small | 1,031.38 | 46.36 | 41.40 |

8 | Black Rose Ind. | Small | 692.07 | 46.59 | 44.16 |

9 | Ion Exchange | Small | 1,264.49 | 26.10 | 20.80 |

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One error in your calculation. The three month return should be annualized before taking average. Nice post. Thanks

3M returns are indicated as absolute. It is not an error.

Thanks for your comment.

Hi Mani, Another nice article. I also suggest that you review the concept of CAGR which i believe is a much better parameter and indeed an essential one. See the below for a quick example :

year Value Annual % @6.55%

0 100,000

1 140,000 40.00 106,548

2 112,000 -20.00 113,526

3 120,960 8.00 120,960

Average Return 9.33

CAGR 6.55%

In the example the stock’s average return is 9.33% which seems better than a fixed deposit.

But in reality, an investor would have been better off investing in a risk free post office TD @6.9% and would have got better returns.

CAGR considers the annual capital addition on account of returns indirectly and is therefore a better measure to compare the returns as in the above example.

Regards

Sid

Yes, I agree with you. CAGR is a much better parameter, especially for long term holders.

Best,

Karan

CAGR is annualised rate. Here the period in question is 3 months.

Significance of Overall Return of Vinati.

This is a nice article. I thought i will replicate your Vinati Example. However your article has no date and which stock prices u have taken cannot be known. Hence your annualized % cannot be determined.

Can u pl 1) Let me know Vinati stock prices that u had considered for this article or 2) Pl explain how have u calculated annualized return?

Thanks for sharing the post. The way you narrated the post is good and understanding. After reading this post I learned some new things about Indian stocks. Please let me know for the upcoming posts.

hi sir

please suggest web sit from which we can get each year returns

Great piece of info. Keep on doing it.

Overall return %age is definitely a very good metric to measure the quality of a stock.Thanks for sharing this great post.

Sir,

Your website is very informative. But changing layout frequently annoy very much. Please do something for this.

Thanks for your feedback.

Nice sir

I think out of the 5 stocks you mentioned, Bajaj and Relaxo both looks good for investment.

I came across your blog and your analysis is really informative.

I am wondering is there any way to identify such stocks in initial stages like within 3 years time span. anyone who has invested on these stocks around 2011 would have made great money.

Is there any common characteristics between them in early stages ?

Thanks for your comment.

Identification of such growth stocks is not easy. There are several limitation with we common men. The biggest is “lack of data base”. What we have, is websites like moneycontrol, Enonomic Times etc which provides with fair-enough info. So what we can do? One way to do it is to keep track of its Profits as explained in this blog post. Potential such stocks with have a low PEG ratio.

Thanks for the reply. Going through all your blogs one by one and appreciate your efforts to explain complex things in such a way that it becomes easy to understand and keeps user’s interest intact.

Just curious about , what your stock analysis tool is suggesting if we feed 2008 – 2011/2012 data of these stocks. Planning to buy it and bit curious what it has to say for such scenarios.

Thanks in Advance 🙂

Hello, Thanks for posting your comment. The worksheet tries to estimate the “intrinsic value” of stocks. To know more about it, you can check the product page please.

Nice

Hello Sir,

I have a question. As you have said “Hindustan Unilever Ltd. – 19.27% CAGR-10Y”, is this return as mentioned here do we get each year i.e., 1st year, 2nd till 10th?

Thank you

CAGR is “average” growth rate achieved over a period of 10 years.