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If I'm looking to pick stocks that will double in 3 years, how do I figure out what is the likely universe that I'm choosing from? I just want a rough estimate of the universe given the market cap constraint of $1b USD market cap on a global basis. How do I go about estimating that?

I need a historical "average"... historically on average what % of stocks will double in 3 years?

Maybe make some simple standard deviation of returns for the market and see what sigma 2x in 3 years falls under? let's say if historically market goes up 12% a year... not sure if it is the right approach to it.

Basically wanted to get a rough estimate without actually crunching a whole bunch of historical numbers.

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    $\begingroup$ Do you want historical estimates or some sort of prediction scheme? The latter is probably out of scope here. $\endgroup$
    – Forgottenscience
    May 15, 2016 at 13:40
  • $\begingroup$ @Forgottenscience I have cleared up the question. Thanks for the feedback. $\endgroup$
    – jason
    May 16, 2016 at 6:08

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few comments:

1) stock that will double in 3 years means that the yearly average return must satisty $x(1+r)^3=2x$, which gives the value of r=25.99%. (a yearly return of 25.99% is highly unrealistic)

2) the question "historically on average what % of stocks will double in 3 years?" cannot be answered without looking at the historical numbers, and the more data you'd use, the better.

3) given that data (whatever data you have available - FTSE, S&P 500, Rusell), you'd choose the +$1b stocks, calculate yearly returns and look at the percentage of returns which satisfy the above condition (i.e. average return of 25.99%), or calculate returns over three-year period and simply count how many have a 100% return in 3 years. This is if you're interested in historical performance.

If you're looking to forecast the potential future returns and see if a stock can double, you'd need to do a time-series analysis (of each stock), forecast the returns (with a certain confidence interval), and see whether doubling in 3 years is possible.

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    $\begingroup$ Regarding 1 - what do you mean, unrealistic? Thousands and thousands of stocks have had that growth rate for longer periods than three years. $\endgroup$
    – Forgottenscience
    Oct 13, 2016 at 14:11

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