there is no such thing as stage 1, its a myth which has been built up in video games.
stage 1, stage 2 have no meaning.
modifications like free flow exhaust, spark plugs, 7mm-9mm spark plug leads, lightened flywheel, cold air intake, distributor.
all these mods will add very less horsepower when done individually but if u do all of them together u will feel a difference, maybe a total gain of 10-20 hp.
proper modifications after these ones are engine related, there are two routes to go
route 1 : forced induction,
forced induction makes use of a supercharger or a turbo which is a compressor which shoves more air into the engine at a pressure. with this increased air we use bigger fuel injectors to get more fuel into the engine. consequently the engine will make more power.
there is a limit to how much power a normal engine will make after u put a turbo or supercharger on it and after that it will break apart.
route 2 : naturally aspirated
the 2nd route is to build up the engines internals and not use forced induction. we can change the camshafts, we can change the intake and exhaust valves, increase the compression of the engine.
this is going to get more and more complex if u explain it more and more, which is why u should make use of www.howstuffworks.com and find out what a turbo is, what a camshaft is etc etc.