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Investors on the lookout for stocks with the potential for maximum growth and value investing may consider the growth at a reasonable price or GARP strategy.
This popular strategy helps investors gain exposure to stocks with impressive growth prospects that are trading at a discount. GARP investing employs popular value metrics — price-to-earnings (P/E) and price-to-book value (P/B) ratio — to evaluate whether a stock is undervalued.
GARP Metrics – Mix of Growth & Value Metrics
The GARP strategy seeks to offer an ideal investment by utilizing the best features of both value and growth investing. Investors adopting the GARP approach will prefer to buy stocks that are priced below the market or any reasonable target determined by fundamental analysis. These stocks also have solid prospects in cash flow, revenues, earnings per share (EPS) and so on.
Growth Metrics
Both strong earnings growth history and impressive earnings prospects are the main concepts that GARP investors borrow from the growth investing strategy. However, instead of super-normal growth rates, pursuing stocks with a more stable and reasonable growth rate is also a tactic of GARP investors. Hence, growth rates between 10% and 25% are considered ideal under the GARP strategy.
Another growth metric that is considered by both growth and GARP investors is return on equity (ROE). GARP investors look for strong and higher ROE compared to the industry average to identify superior stocks. Moreover, stocks with positive cash flow find precedence under the GARP plan.
Value Metrics
GARP investing gives priority to one of the popular value metrics – the price-to-earnings (P/E) ratio. Though this investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios. Moreover, the price-to-book value (P/B) ratio is also considered.
Using the GARP principle, we have run a screen to identify stocks that should offer solid returns in the near term.
Here are four of the five stocks that made it through the screen:
Microsoft Corp. is a broad-technology provider whose offerings comprise operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools and video games. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Microsoft has a trailing four-quarter earnings surprise of 14.75%, on average. The Zacks Consensus Estimate for fiscal 2022 has moved north by 0.1% to $9.13 per share over the past 60 days.
CDW Corp. is a leading provider of integrated information technology (IT) solutions to small, medium and large business, government, education and healthcare customers. The company carries a Zacks Rank #2 currently.
CDW has a trailing four-quarter earnings surprise of 12.17%, on average. The Zacks Consensus Estimate for 2021 has moved north by 0.3% to $7.83 per share over the past 60 days.
SEI Investments Co. is an asset management company offering wealth management business solutions that includes investment processing, management and operations solutions. The company has a Zacks Rank #2.
SEI Investments has a trailing four-quarter earnings surprise of 1.87%, on average. The Zacks Consensus Estimate for 2021 has moved north by 0.5% to $3.76 per share over the past 60 days.
W.W. Grainger is a broad line, business-to-business distributor of maintenance, repair and operating products and services which operates primarily in North America, Japan and the U.K. The company carries a Zacks Rank #2 currently.
The Zacks Consensus Estimate for W.W. Grainger’s 2021 has moved north by 0.1% to $19.60 per share over the past 60 days.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include: Microsoft Corp., CDW Corp., SEI Investments Co. and W.W. Grainger
For Immediate Release
Chicago, IL – January 19, 2022 – Stocks in this week’s article are Microsoft Corp. (MSFT - Free Report) , CDW Corp. (CDW - Free Report) , SEI Investments Co. (SEIC - Free Report) and W.W. Grainger (GWW - Free Report) .
4 GARP Stocks for a Winning Portfolio
Investors on the lookout for stocks with the potential for maximum growth and value investing may consider the growth at a reasonable price or GARP strategy.
This popular strategy helps investors gain exposure to stocks with impressive growth prospects that are trading at a discount. GARP investing employs popular value metrics — price-to-earnings (P/E) and price-to-book value (P/B) ratio — to evaluate whether a stock is undervalued.
GARP Metrics – Mix of Growth & Value Metrics
The GARP strategy seeks to offer an ideal investment by utilizing the best features of both value and growth investing. Investors adopting the GARP approach will prefer to buy stocks that are priced below the market or any reasonable target determined by fundamental analysis. These stocks also have solid prospects in cash flow, revenues, earnings per share (EPS) and so on.
Growth Metrics
Both strong earnings growth history and impressive earnings prospects are the main concepts that GARP investors borrow from the growth investing strategy. However, instead of super-normal growth rates, pursuing stocks with a more stable and reasonable growth rate is also a tactic of GARP investors. Hence, growth rates between 10% and 25% are considered ideal under the GARP strategy.
Another growth metric that is considered by both growth and GARP investors is return on equity (ROE). GARP investors look for strong and higher ROE compared to the industry average to identify superior stocks. Moreover, stocks with positive cash flow find precedence under the GARP plan.
Value Metrics
GARP investing gives priority to one of the popular value metrics – the price-to-earnings (P/E) ratio. Though this investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios. Moreover, the price-to-book value (P/B) ratio is also considered.
Using the GARP principle, we have run a screen to identify stocks that should offer solid returns in the near term.
Here are four of the five stocks that made it through the screen:
Microsoft Corp. is a broad-technology provider whose offerings comprise operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools and video games. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Microsoft has a trailing four-quarter earnings surprise of 14.75%, on average. The Zacks Consensus Estimate for fiscal 2022 has moved north by 0.1% to $9.13 per share over the past 60 days.
CDW Corp. is a leading provider of integrated information technology (IT) solutions to small, medium and large business, government, education and healthcare customers. The company carries a Zacks Rank #2 currently.
CDW has a trailing four-quarter earnings surprise of 12.17%, on average. The Zacks Consensus Estimate for 2021 has moved north by 0.3% to $7.83 per share over the past 60 days.
SEI Investments Co. is an asset management company offering wealth management business solutions that includes investment processing, management and operations solutions. The company has a Zacks Rank #2.
SEI Investments has a trailing four-quarter earnings surprise of 1.87%, on average. The Zacks Consensus Estimate for 2021 has moved north by 0.5% to $3.76 per share over the past 60 days.
W.W. Grainger is a broad line, business-to-business distributor of maintenance, repair and operating products and services which operates primarily in North America, Japan and the U.K. The company carries a Zacks Rank #2 currently.
The Zacks Consensus Estimate for W.W. Grainger’s 2021 has moved north by 0.1% to $19.60 per share over the past 60 days.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1853485/4-garp-stocks-for-a-winning-portfolio
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.