Finding a stock that rises 100 times sounds almost impossible, but growth investor Kris Heyndrikx argues that the real challenge is not only finding exceptional companies early. It is holding them long enough for compounding to work.
In an interview with Compounding Quality, Heyndrikx explained the strategy behind investments that produced an 8,720% return on Nvidia and 2,668% on Shopify. His approach focuses on disruptive businesses with strong growth, high-quality management and the potential to keep expanding for many years.
Look for Growth That Can Last
Heyndrikx looks for high-quality disruptive companies that could grow 10 times or more over roughly a decade.
Even smaller returns can produce impressive long-term results. A stock that rises 5x over 10 years represents roughly 17% annual returns, while a 10x return works out to around 26% annually.
His point is simple: investors do not necessarily need constant trading or highly speculative bets. A great company bought early and held for years can potentially deliver much larger returns through compounding.
Three Filters Before Buying
Heyndrikx starts with three main questions.
First, is the company operating in an interesting market with significant room to grow? He avoids businesses where the overall market is shrinking because even a strong company can struggle against a declining industry.
Second, he looks for consistent revenue growth of at least 20%.
Third comes management quality. Heyndrikx places particular importance on visionary founders and executives who understand where their industries are heading.
Only companies that pass all three tests move into deeper research, including earnings calls, annual reports, investor presentations, regulatory filings and CEO interviews. About 90% of companies are eliminated after the first filter alone, according to Heyndrikx.
Nvidia and Shopify Show Why Management Matters
Shopify became one of his biggest winners.
Heyndrikx bought the stock in February 2017 at a split-adjusted $5.58, initially after hearing founder and CEO Tobi Lütke on a podcast. Shopify was worth only around $4.5 billion at the time.
He later bought Nvidia in 2017 at around a split-adjusted $2.50, when the company was valued at roughly $60 billion.
Two things attracted him to Nvidia: Jensen Huang’s leadership and the company’s early focus on artificial intelligence. As early as 2016, Nvidia was already positioning itself as an AI computing company, years before the current AI boom transformed the semiconductor industry.
For Heyndrikx, both investments demonstrated the importance of finding management teams with a long-term vision and the ability to execute it.
Finding the Winner Is Only 10% of the Work
The hardest part comes afterward.
Heyndrikx estimates that finding a great growth stock represents only around 10% of the work. Holding it through market crashes, negative headlines and major price declines is much harder.
A future multibagger can easily fall 50% or even 70% along the way.
Selling after a quick 30% or 40% gain can therefore mean giving up much larger long-term returns if the company’s fundamentals remain strong.
His philosophy is to buy growth companies and hold them as long as the business continues executing, allowing them eventually to move from high-growth stocks toward mature, highly profitable businesses.
Buying More When Markets Fall
Heyndrikx also uses dollar-cost averaging, regularly investing every two weeks rather than trying to perfectly time market bottoms.
For companies including Shopify, Cloudflare and CrowdStrike, he estimates that he has bought shares more than 50 times over the years.
He becomes even more aggressive during broad market declines. If the S&P 500 falls 10%, he tries to invest 20% more than usual. At a 20% decline, he increases his investment by 50%. If the market falls 30%, he tries to double his normal investment amount.
The strategy depends on having new income available to invest and is not suitable in exactly the same way for investors managing a closed portfolio.
Investor takeaway: There is no simple formula for finding the next Nvidia or Shopify. Heyndrikx’s strategy instead focuses on a combination of 20%+ revenue growth, large future markets, exceptional management and patience. Most importantly, finding a potential 100-bagger is only the beginning. The much harder part is holding it for years while the business continues to deliver.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
