What’s a 10-bagger?
Made famous by legendary investor Peter Lynch, it’s a stock that has appreciated 10-fold from the original price.
While rare, these companies usually exhibit a few common characteristics: a large market opportunity, the ability to scale quickly, and the ability to deliver consistent, strong growth.
For local investors, there may be some mid-cap stocks in Singapore exhibiting 10-bagger potential.
Let’s take a look at one company that may achieve this rare feat.
What Makes a Stock a Potential 10-Bagger
The first condition in creating the ideal environment to nourish a potential 10-bagger is having a large market opportunity; it’s even better if the market opportunity is expanding due to a secular growth trend.
Next, having some form of competitive advantage that allows the company to capitalise on the market opportunity and grow its earnings over time is also helpful.
Finally, being spearheaded by a management team with a clear long-term growth strategy can really help steer the company to an eventual 10-bagger.
The key here is that really big winners are companies that can compound growth over a long time period.
Why Mid-Caps Can Be Attractive Hunting Grounds
Mid-caps provide a fertile ground for investors looking for the next potential 10-bagger.
Unlike small-caps, a mid-cap company has better stability in its business, while its smaller size compared to large-caps provides more room for growth.
Furthermore, mid-caps are typically under-followed by analysts, compared to blue-chips, which in turn, could also mean the company is an undiscovered gem, providing greater scope for valuation re-rating.
Centurion Corporation Limited (SGX: OU8), or Centurion
A Business with Long-Term Growth Drivers
Centurion operates 40 accommodation properties with 81,400 beds, spread across six countries within the migrant worker housing and student housing sectors.
In Singapore, the commercial worker dormitory market is supported by ongoing construction activity, including massive infrastructure projects like Tuas Port.
Demand continues to soar, with island-wide industry occupancy at 97.1%.
When combined with a government transition scheme (2026-2030) that requires existing dormitories to upgrade their facilities, the beds being taken offline for retrofitting should keep supply constrained, thereby supporting dormitory rents.
For perspective, Centurion’s local dormitories are already running at 95% occupancy.
On the student housing side, global demand is booming, with the total market opportunity expected to surge from US$63 billion in 2025 to US$115 billion by 2033.
For the UK, Hong Kong, and Australia, the student housing provider expects to see positive rental reversions, spurred by an undersupply of beds, to continue supporting the operating performance from this segment.
Riding on these tailwinds, Centurion has seen revenue soar at a 20.3% compound annual growth rate (CAGR) over the last five years, with annual top line coming in at S$335.5 million for 2025.
The key takeaway here is that capitalising on a steadily expanding market can generate long-term growth for a company.
Earnings Scalability and Operating Leverage
When you combine margin expansion with top-line growth, you get the one-two combo that leads to serious shareholder returns.
Over the same five-year period, Centurion has seen its operating profits compound at an even faster rate than revenue, posting a 24.7% CAGR, from S$70.8 million in 2020 to S$213 million in 2025.
Operating margin has also trended up steadily: from 53.1% in 2020 to 63.5% in 2025.
Centurion’s steady compounding of earnings, faster than its revenue growth, underpins the scalability of its business.
Balance Sheet and Cash Flow Strength
Impressively, Centurion’s growth is funded sustainably by organic cash flow generation, instead of taking on excessive debt.
Both operating and free cash flow have compounded at a CAGR of over 20% over the last five years.
Turning our eyes to the balance sheet, the accommodation provider is moderately leveraged, with a net gearing ratio of 22%, supported by a healthy cash position of S$340.8 million.
Centurion’s financial strength provides the group with a solid buffer against market downturns, sharply strengthening its long-term resilience.
Why the Market May Still Be Underestimating It
Despite the positives, Centurion is currently trading at a trailing price-to-earnings ratio (PER) of around 11x.
For context, its construction peers sport an average PER of around 10x.
Arguably, this premium is justified given the strong historical performance exhibited by the group in growing its earnings and cash flows, alongside a conducive market environment.
In fact, you can even argue that the market is mispricing the growth potential of Centurion.
What Could Stop It from Becoming a 10-Bagger
What about risks?
Any savvy investor should also consider the potential risks that could prevent Centurion from achieving a 10-bagger status.
Increasing competition from peers such as Wee Hur Holdings Limited (SGX: E3B) could limit its growth runway.
Executional mishaps by management could also hurt the stock’s potential.
The key takeaway is that a shorter growth runway could undo the stock’s 10-bagger potential.
How Investors Should Approach High-Growth Mid-Caps
When investing in potential 10-baggers, you should expect some outsized volatility.
That said, paying close attention to management’s execution and the progression of the business fundamentals can help alleviate the stress of downward price movement.
Keeping the position sizes of these riskier stocks small is also helpful in ensuring you don’t blow up, should you get your analysis wrong.
More importantly, you have to be patient and let the business compound over the years to really realise multi-bagging gains.
Get Smart: The Biggest Winners Rarely Look Obvious at the Start
In sum, the journey of a 10-bagger usually begins when a mid-size company enjoys a compelling growth story.
Identifying such a company is the first step.
You also have to monitor its execution over time, and most importantly, you have to be patient and let the company compound quietly over time.
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Disclosure: Wilson H. does not own shares in any of the companies mentioned.
