In this article, we will take a detailed look at 12 Best Multibagger Stocks to Buy in 2025.
In the world of investing, the term “multibagger” refers to stocks that have the potential to deliver returns several times greater than the original investment. One key factor that can help identify potential multibaggers is momentum. Momentum investing focuses on capitalizing on the continuation of existing market trends. Investors using this strategy look for stocks that are experiencing upward price movements, often driven by strong earnings reports, positive news, industry tailwinds, or overall market sentiment. The idea is simple: “the trend is your friend,” and momentum can be a powerful force in identifying winners before they peak. The importance of momentum has been recognized by famous investors, but many of them emphasized the idea that it is crucial to catch momentum stocks early on. As Warren Buffett put it – “What the wise do in the beginning, fools do in the end”.
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The US market is close to entering a correction mode as the absolute magnitude of decline since the mid-February peak is approaching 10%. The current policies of the new US administration, such as tariffs, federal jobs cuts and cuts in some large-scale public projects, are causing havoc among investors as many are fearing a scenario in which the US economy enters stagflation – a period of high inflation among weak economic growth and unemployment. Some analysts have pointed out that sectors reliant on government contracts, such as infrastructure and defense, are already experiencing heightened volatility as a result of these policy shifts. In a recent interview with Maria Bartiromo on Fox News, the President himself refused to rule out a recession in the current year and claimed that the economy is in “a period of transition” and that tariffs might fuel inflation at some point. With consumer confidence showing early signs of weakening, as signaled by recent business surveys, some economists argue that the Federal Reserve may be forced to intervene sooner than expected to stabilize the markets. This idea was already supported by the President, who at some point expressed the opinion that interest rates in the US economy are higher than they should be.
The aforementioned developments have caused a market selloff, particularly in previously high-momentum stocks such as the Magnificent 8, which have benefited from the AI megatrend and were responsible for most of the market returns last year. Prior to that, many previously well-performing stocks, such as government contractors, had already lost their momentum following the election results, while some of the few well-performing healthcare stocks were hit by Medicare/Medicaid reimbursement threats. Likewise, the energy sector remained somewhat out of favor – despite volume tailwinds from Trump 2.0, the expectation of lower oil prices amid a weaker economy has put downward pressure on stock prices in the sector. The key takeaway for investors is that one should look for multibaggers that haven’t yet lost their momentum during the market dip in the last month. These are often lower-capitalization companies that are underfollowed by analysts and operate in high-growth markets.
A trader cheers his market gains. Photo by Tima Miroshnichenko on Pexels
Our Methodology
To compile our list of multibagger stocks, we used Finviz to filter the companies that have delivered at least 200% stock price return in the last twelve months. Then we compare the list with our proprietary database of hedge funds ownership as of Q4 2024 and include in the article the top 12 names with the highest number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12. Innodata Inc. (NASDAQ:INOD)
Number of Hedge Fund Holders: 15
Stock Price Return in the last twelve months: 522%
Innodata Inc. (NASDAQ:INOD) is a data engineering and AI company that provides digital transformation solutions for enterprises. It specializes in AI model training, data annotation and knowledge management, serving industries such as technology, finance, healthcare, and publishing. INOD’s services include data preparation, machine learning model development, and content digitization, helping businesses leverage AI for automation and analytics. The company operates globally, delivering scalable data solutions to support AI-driven applications.
Innodata Inc. (NASDAQ:INOD) delivered exceptional Q4 2024 results with revenue reaching $59.2 million, representing a 127% YoY increase. For the full year 2024, the company achieved revenue of $170.5 million, marking a 96% increase over 2023. The company demonstrated strong profitability with Q4 adjusted EBITDA of $14.1 million (23.9% of revenue) and full year adjusted EBITDA of $34.6 million (20.3% of revenue). The company’s financial position strengthened significantly, ending the year with $46.9 million in cash, up from $13.8 million at the end of 2023, while maintaining an undrawn $30 million credit facility.
Looking ahead, Innodata Inc. (NASDAQ:INOD) has forecasted 40% or more revenue growth for 2025, building on their momentum with big tech customers. The company’s largest customer relationship expanded to approximately $135 million in annualized run rate revenue, while revenues from seven other big tech customers grew by 159% sequentially. INOD is strategically positioning itself in the growing AI services market, particularly focusing on providing data engineering services for generative AI frontier models to big tech companies and enterprises. Management plans to reinvest in the business through 2025 while aiming to exceed 2024’s adjusted EBITDA, focusing investments primarily on expanding technology, product development, operations, and sales capabilities. With a 522% stock price return in the last twelve months, INOD is one of the best multibagger stocks to buy in 2025.
11. Root, Inc. (NASDAQ:ROOT)
Number of Hedge Fund Holders: 16
Stock Price Return in the last twelve months: 224%
Root, Inc. (NASDAQ:ROOT) is a technology-driven insurance company that uses data science and telematics to offer personalized auto, home, and renters insurance. It leverages mobile app-based driving behavior analysis to determine premiums, aiming to provide fairer pricing based on individual risk rather than traditional demographic factors. ROOT operates primarily in the US, selling policies directly to consumers through its digital platform. The company focuses on automation, AI-driven underwriting, and customer-centric technology to streamline the insurance process.
The year 2024 was a landmark for Root, Inc. (NASDAQ:ROOT), as the company marked its first full year of net income profitability with GAAP net income of $31 million and adjusted EBITDA of $112 million. ROOT achieved impressive operational metrics, including a gross combined ratio of 95% on $1.3 billion of gross premiums written, while growing policies in force by 21% YoY to more than 414,000. The company’s underwriting performance remained strong with a gross loss ratio of 59%, which the company believes is best-in-class. The company made significant strides in expanding its distribution channels, with partnership channel new writings more than doubling in 2024 and representing approximately one-third of overall new business in the fourth quarter.
Root, Inc. (NASDAQ:ROOT)’s technological advantage was demonstrated through its proprietary tech stack that enables seamless integration with partner platforms and its ability to maintain nimble pricing strategies. The company’s improved performance led to a reduction in run-rate interest expense by more than 50% and significantly reduced reinsurance costs. Looking ahead, management plans to continue its growth trajectory through national expansion, having recently launched in Minnesota and now reaching 76% of the US population. The company maintains a focus on disciplined underwriting while planning to reduce rates in select states due to favorable loss ratio trends, aiming to offer better savings to their best drivers. With a 224% stock price return in the last year, ROOT is one of the best multibagger stocks to buy in 2025.
