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Scoop Up These GARP Stocks to Receive Handsome Returns
If you are looking for a profitable portfolio of stocks offering the best of value and growth investing, try the growth at a reasonable price or GARP strategy.
The strategy helps investors gain exposure to undervalued stocks with impressive prospects. Unlike a blend strategy, a portfolio that uses GARP investing is expected to include stocks that offer the best value and growth investing. Arcos Dorados, NRG Energy, Mastercard and Sterling Infrastructure are some GARP stocks that hold promise.
GARP Metrics — Mix of Growth & Value Metrics
The GARP strategy seeks to offer an ideal investment by utilizing the best features of value and growth investing. Investors adopting the GARP approach prefer buying stocks priced below the market or any reasonable target determined by fundamental analysis. These stocks also have solid prospects in terms of cash flow, revenues, earnings per share (EPS) and so on.
Growth Metrics
A 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 a tactic of GARP investors. Hence, growth rates between 10% and 40% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is the return on equity (ROE). GARP investors look for a strong and higher ROE than the industry average to identify superior stocks. Stocks with positive cash flows find precedence under the GARP plan.
Value Metrics
GARP investing prioritizes the popular value metrics — the price-to-earnings (P/E) and price-to-book (P/B) ratios. Though this investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios.
Using the GARP principle, we ran a screen to identify stocks that should offer solid returns in the near term.
Here are four stocks that made it through the screen:
Arcos Dorados operates as a franchisee of McDonald's, with its operations divided among Brazil, North Latin America division, South Latin America and the Caribbean division. It also operates quick-service restaurants in Latin America and the Caribbean. ARCO currently flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Arcos Dorados has gained 38.5% over a year. It delivered a trailing four-quarter earnings surprise of 28.3% on average. The Zacks Consensus Estimate for ARCO’s 2023 earnings has moved 9.3% north to 82 cents per share over the past 60 days.
NRG Energy is engaged in the production, sale and delivery of energy and energy products and services to residential, industrial and commercial consumers. The company currently sports a Zacks Rank #1.
NRG Energy has gained 65.7% over a year. It has a trailing four-quarter earnings surprise of 4.7% on average. The Zacks Consensus Estimate for NRG’s 2023 earnings has moved 0.6% north to $5.06 per share over the past 60 days.
Mastercard is a global payment solutions company that provides an array of services in support of credit, debit, mobile, web-based and contactless payments and other related electronic payment programs. The company currently carries a Zacks Rank #2.
Mastercard has gained 15% over a year. It has a trailing four-quarter earnings surprise of 3.5% on average. The Zacks Consensus Estimate for MA’s 2023 earnings has moved 0.1% north to $512.17 per share in the past 60 days.
Sterling Infrastructure operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions that aid in developing large-scale site development systems and services projects, residential and commercial concrete foundation projects, and infrastructure and rehabilitation projects for highways, roads and bridges to name a few. The company currently carries a Zacks Rank #2.
Sterling Infrastructure has gained 131.5% over a year. It has a trailing four-quarter earnings surprise of 12.18% on average. The Zacks Consensus Estimate for 2023 earnings has moved 0.2% north to $4.19 per share in the past 60 days.
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.
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/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights Arcos Dorados, NRG Energy, Mastercard and Sterling Infrastructure
For Immediate Release
Chicago, IL – January 16, 2024 – Stocks in this week’s article are Arcos Dorados (ARCO - Free Report) , NRG Energy (NRG - Free Report) , Mastercard (MA - Free Report) and Sterling Infrastructure (STRL - Free Report) .
Scoop Up These GARP Stocks to Receive Handsome Returns
If you are looking for a profitable portfolio of stocks offering the best of value and growth investing, try the growth at a reasonable price or GARP strategy.
The strategy helps investors gain exposure to undervalued stocks with impressive prospects. Unlike a blend strategy, a portfolio that uses GARP investing is expected to include stocks that offer the best value and growth investing. Arcos Dorados, NRG Energy, Mastercard and Sterling Infrastructure are some GARP stocks that hold promise.
GARP Metrics — Mix of Growth & Value Metrics
The GARP strategy seeks to offer an ideal investment by utilizing the best features of value and growth investing. Investors adopting the GARP approach prefer buying stocks priced below the market or any reasonable target determined by fundamental analysis. These stocks also have solid prospects in terms of cash flow, revenues, earnings per share (EPS) and so on.
Growth Metrics
A 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 a tactic of GARP investors. Hence, growth rates between 10% and 40% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is the return on equity (ROE). GARP investors look for a strong and higher ROE than the industry average to identify superior stocks. Stocks with positive cash flows find precedence under the GARP plan.
Value Metrics
GARP investing prioritizes the popular value metrics — the price-to-earnings (P/E) and price-to-book (P/B) ratios. Though this investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios.
Using the GARP principle, we ran a screen to identify stocks that should offer solid returns in the near term.
Here are four stocks that made it through the screen:
Arcos Dorados operates as a franchisee of McDonald's, with its operations divided among Brazil, North Latin America division, South Latin America and the Caribbean division. It also operates quick-service restaurants in Latin America and the Caribbean. ARCO currently flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Arcos Dorados has gained 38.5% over a year. It delivered a trailing four-quarter earnings surprise of 28.3% on average. The Zacks Consensus Estimate for ARCO’s 2023 earnings has moved 9.3% north to 82 cents per share over the past 60 days.
NRG Energy is engaged in the production, sale and delivery of energy and energy products and services to residential, industrial and commercial consumers. The company currently sports a Zacks Rank #1.
NRG Energy has gained 65.7% over a year. It has a trailing four-quarter earnings surprise of 4.7% on average. The Zacks Consensus Estimate for NRG’s 2023 earnings has moved 0.6% north to $5.06 per share over the past 60 days.
Mastercard is a global payment solutions company that provides an array of services in support of credit, debit, mobile, web-based and contactless payments and other related electronic payment programs. The company currently carries a Zacks Rank #2.
Mastercard has gained 15% over a year. It has a trailing four-quarter earnings surprise of 3.5% on average. The Zacks Consensus Estimate for MA’s 2023 earnings has moved 0.1% north to $512.17 per share in the past 60 days.
Sterling Infrastructure operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions that aid in developing large-scale site development systems and services projects, residential and commercial concrete foundation projects, and infrastructure and rehabilitation projects for highways, roads and bridges to name a few. The company currently carries a Zacks Rank #2.
Sterling Infrastructure has gained 131.5% over a year. It has a trailing four-quarter earnings surprise of 12.18% on average. The Zacks Consensus Estimate for 2023 earnings has moved 0.2% north to $4.19 per share in the past 60 days.
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 of the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2210275/scoop-up-these-4-garp-stocks-to-receive-handsome-returns
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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/performance for information about the performance numbers displayed in this press release.