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Growth at a reasonable price, or GARP, is an excellent strategy to earn quick investment profits. The GARP approach helps identify stocks priced below the market or any suitable target determined by a fundamental analysis.
The strategy helps investors gain exposure to stocks with impressive prospects and trading at a discount. A portfolio based on the GARP strategy comprises stocks that offer the best of value and growth investing. Ferrari (RACE - Free Report) , W.W. Grainger (GWW - Free Report) , Allegion (ALLE - Free Report) and Edwards Lifesciences (EW - Free Report) are some such stocks that hold promise.
GARP Metrics — Mix of Growth & Value Metrics
The GARP strategy offers ideal investment options by utilizing the best features of value and growth investing. Investors adopting the GARP approach prefer stocks priced below the market or any reasonable target determined by fundamental analysis. The stocks have solid prospects based on cash flow, revenues, EPS and others.
Growth Metrics
A strong earnings growth history and impressive earnings prospects are the primary concepts that GARP investors borrow from the growth investing strategy. However, instead of super-normal rates, pursuing stocks with a more stable and reasonable growth rate is a tactic of GARP investors. Growth rates between 5% and 20% are considered ideal under this strategy.
Another metric considered by growth and GARP investors is return on equity (ROE). GARP investors look for strong and higher ROE than the industry average to identify superior stocks. Moreover, stocks with a positive cash flow find precedence under the GARP plan.
Value Metrics
GARP investing prioritizes one of the popular value metrics — the price-to-earnings (P/E) ratio. Though the investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios. The price-to-book value (P/B) ratio is also taken into consideration.
Using the GARP principle, we have run a screen to identify stocks that should offer solid returns in the near term.
Screening Parameters
Along with the criteria discussed in the above section, we have considered a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Last five-year EPS & projected 3-5-year EPS growth rates between 5% and 20% (Strong EPS growth history and prospects ensure improving business.)
ROE (over the past 12 months) greater than the industry average(Higher ROE compared with the industry average indicates superior stocks.)
P/E and P/B ratios less than the M-industry average (P/E and P/B ratios less than that of the industry indicate that the stocks are undervalued.)
Here are four of the 11 stocks that made it through the screen:
Ferrari is a leading designer and manufacturer of sports cars. Its products include models like 458 Italia, 488 GTB, 458 Spider, 488 Spider, F12 Berlinetta, 458 Speciale and 458 Speciale A, to name a few. The company currently flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Ferrari has a trailing four-quarter earnings surprise of 10.82% on average. The Zacks Consensus Estimate for RACE’s 2023 earnings has moved 4.4% north to $6.58 per share in the past 60 days.
W.W. Grainger is a broad-line, business-to-business distributor of maintenance, repair and operating products and services primarily in North America, Japan and the U.K. The company currently carries a Zacks Rank #2.
W.W. Grainger has a trailing four-quarter earnings surprise of 9.15%, on average. The Zacks Consensus Estimate for W.W. Grainger’s 2023 earnings has moved 1.8% north to $35.86 per share in the past 60 days.
Allegion is a leading global provider of security products and solutions for business and domestic purposes. Its extensive portfolio of mechanical and electronic security products includes doors and door systems, electronic security products, biometric and mobile access control systems, locks, locksets, exit devices, portable locks and workforce productivity systems. The company currently carries a Zacks Rank #2.
Allegion has a trailing four-quarter earnings surprise of 12.49%, on average. The Zacks Consensus Estimate for ALLE’s 2023 earnings has moved 1.2% north to $6.63 per share in the past 60 days.
Edwards Lifesciences is a manufacturer of tissue heart valves and repair products used to replace or repair a patient's diseased or defective heart valve. It also offers hemodynamic monitoring systems that are used to measure a patient's cardiovascular function. The company carries a Zacks Rank #2.
Edwards Lifesciences has a trailing four-quarter earnings surprise of 1.24% on average. The Zacks Consensus Estimate for EW’s 2023 earnings has moved 0.4% north to $2.55 per share in the past 60 days.
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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.
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4 GARP Stocks to Scoop Up for Maximum Returns
Growth at a reasonable price, or GARP, is an excellent strategy to earn quick investment profits. The GARP approach helps identify stocks priced below the market or any suitable target determined by a fundamental analysis.
The strategy helps investors gain exposure to stocks with impressive prospects and trading at a discount. A portfolio based on the GARP strategy comprises stocks that offer the best of value and growth investing. Ferrari (RACE - Free Report) , W.W. Grainger (GWW - Free Report) , Allegion (ALLE - Free Report) and Edwards Lifesciences (EW - Free Report) are some such stocks that hold promise.
GARP Metrics — Mix of Growth & Value Metrics
The GARP strategy offers ideal investment options by utilizing the best features of value and growth investing. Investors adopting the GARP approach prefer stocks priced below the market or any reasonable target determined by fundamental analysis. The stocks have solid prospects based on cash flow, revenues, EPS and others.
Growth Metrics
A strong earnings growth history and impressive earnings prospects are the primary concepts that GARP investors borrow from the growth investing strategy. However, instead of super-normal rates, pursuing stocks with a more stable and reasonable growth rate is a tactic of GARP investors. Growth rates between 5% and 20% are considered ideal under this strategy.
Another metric considered by growth and GARP investors is return on equity (ROE). GARP investors look for strong and higher ROE than the industry average to identify superior stocks. Moreover, stocks with a positive cash flow find precedence under the GARP plan.
Value Metrics
GARP investing prioritizes one of the popular value metrics — the price-to-earnings (P/E) ratio. Though the investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios. The price-to-book value (P/B) ratio is also taken into consideration.
Using the GARP principle, we have run a screen to identify stocks that should offer solid returns in the near term.
Screening Parameters
Along with the criteria discussed in the above section, we have considered a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Last five-year EPS & projected 3-5-year EPS growth rates between 5% and 20% (Strong EPS growth history and prospects ensure improving business.)
ROE (over the past 12 months) greater than the industry average (Higher ROE compared with the industry average indicates superior stocks.)
P/E and P/B ratios less than the M-industry average (P/E and P/B ratios less than that of the industry indicate that the stocks are undervalued.)
Here are four of the 11 stocks that made it through the screen:
Ferrari is a leading designer and manufacturer of sports cars. Its products include models like 458 Italia, 488 GTB, 458 Spider, 488 Spider, F12 Berlinetta, 458 Speciale and 458 Speciale A, to name a few. The company currently flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Ferrari has a trailing four-quarter earnings surprise of 10.82% on average. The Zacks Consensus Estimate for RACE’s 2023 earnings has moved 4.4% north to $6.58 per share in the past 60 days.
W.W. Grainger is a broad-line, business-to-business distributor of maintenance, repair and operating products and services primarily in North America, Japan and the U.K. The company currently carries a Zacks Rank #2.
W.W. Grainger has a trailing four-quarter earnings surprise of 9.15%, on average. The Zacks Consensus Estimate for W.W. Grainger’s 2023 earnings has moved 1.8% north to $35.86 per share in the past 60 days.
Allegion is a leading global provider of security products and solutions for business and domestic purposes. Its extensive portfolio of mechanical and electronic security products includes doors and door systems, electronic security products, biometric and mobile access control systems, locks, locksets, exit devices, portable locks and workforce productivity systems. The company currently carries a Zacks Rank #2.
Allegion has a trailing four-quarter earnings surprise of 12.49%, on average. The Zacks Consensus Estimate for ALLE’s 2023 earnings has moved 1.2% north to $6.63 per share in the past 60 days.
Edwards Lifesciences is a manufacturer of tissue heart valves and repair products used to replace or repair a patient's diseased or defective heart valve. It also offers hemodynamic monitoring systems that are used to measure a patient's cardiovascular function. The company carries a Zacks Rank #2.
Edwards Lifesciences has a trailing four-quarter earnings surprise of 1.24% on average. The Zacks Consensus Estimate for EW’s 2023 earnings has moved 0.4% north to $2.55 per share in the past 60 days.
Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
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.
Disclosure: Performance information for Zacks' portfolios and strategies are available at: https://www.zacks.com/performance.