Theoretically, a stock could rise tenfold over years and years, making the annualized return nothing special. Ten-baggers that happen over a period of just five years, though, return 58% annually. And the10-year time frame implies a still-high 26% annual return.
Analysts at Alliance Bernstein have been researching how to find these stocks, and found about 48% of the 175 instances of five-year ten-baggers since 1980 are in tech.
Shares of these tech firms achieve rapid growth through innovations that disrupt traditional ways of doing things. They take market share from the traditional providers of goods and services, bringing about high sales growth, which eventually creates large profits.