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Scoop up These 4 GARP Stocks to Receive Handsome Returns
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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. Carlisle Companies (CSL - Free Report) , Microsoft (MSFT - Free Report) , W.W. Grainger (GWW - Free Report) and Adobe (ADBE - Free Report) 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 30% 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.
Screening Parameters
Along with the criteria discussed in the above section, we have considered a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Last 5-year EPS & projected 3-5-year EPS growth rates between 10% and 30% (Strong EPS growth history and prospects ensure improving business.)
ROE (over the past 12 months) greater than the industry average (Higher ROE than 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 six stocks that made it through the screen:
Carlisle is engaged in the designing, manufacturing and selling of a wide range of roofing and waterproofing products, engineered products and finishing equipment. CSL currently flaunts a Zacks Rank of 1. You can see the complete list of today's Zacks #1 Rank stocks here.
Carlisle has gained 68.1% year to date. It has a trailing four-quarter earnings surprise of 7.55%, on average. The Zacks Consensus Estimate for CSL's 2024 earnings has moved 2.3% north to $18.44 per share over the past 30 days.
Microsoft is a broad-based 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.
Microsoft has gained 54.5% over a year. It has a trailing four-quarter earnings surprise of 8.82%, on average. The Zacks Consensus Estimate for Microsoft’s fiscal 2024 earnings has moved 0.3% north to $11.63 per share in the past 30 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 gained 49% over a year. It has a trailing four-quarter earnings surprise of 6.5%, on average. The Zacks Consensus Estimate for the company’s 2024 earnings has moved 0.03% north to $39.22 per share over the past 30 days.
Adobe is a diversified software company that offers a wide range of products and services through the Software-as-a-Service model, managed services model, and term subscription and pay-per-use models. ADBE currently carries a Zacks Rank #2.
Adobe has gained 41.6% over a year. It delivered a trailing four-quarter earnings surprise of 3.03%, on average. The Zacks Consensus Estimate for ADBE’s fiscal 2024 earnings has been unchanged at $17.89 per share over the past 30 days.
Get the remaining stocks on the list and start testing this and other ideas. 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 of 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.
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Scoop up These 4 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. Carlisle Companies (CSL - Free Report) , Microsoft (MSFT - Free Report) , W.W. Grainger (GWW - Free Report) and Adobe (ADBE - Free Report) 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 30% 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.
Screening Parameters
Along with the criteria discussed in the above section, we have considered a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Last 5-year EPS & projected 3-5-year EPS growth rates between 10% and 30% (Strong EPS growth history and prospects ensure improving business.)
ROE (over the past 12 months) greater than the industry average (Higher ROE than 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 six stocks that made it through the screen:
Carlisle is engaged in the designing, manufacturing and selling of a wide range of roofing and waterproofing products, engineered products and finishing equipment. CSL currently flaunts a Zacks Rank of 1. You can see the complete list of today's Zacks #1 Rank stocks here.
Carlisle has gained 68.1% year to date. It has a trailing four-quarter earnings surprise of 7.55%, on average. The Zacks Consensus Estimate for CSL's 2024 earnings has moved 2.3% north to $18.44 per share over the past 30 days.
Microsoft is a broad-based 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.
Microsoft has gained 54.5% over a year. It has a trailing four-quarter earnings surprise of 8.82%, on average. The Zacks Consensus Estimate for Microsoft’s fiscal 2024 earnings has moved 0.3% north to $11.63 per share in the past 30 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 gained 49% over a year. It has a trailing four-quarter earnings surprise of 6.5%, on average. The Zacks Consensus Estimate for the company’s 2024 earnings has moved 0.03% north to $39.22 per share over the past 30 days.
Adobe is a diversified software company that offers a wide range of products and services through the Software-as-a-Service model, managed services model, and term subscription and pay-per-use models. ADBE currently carries a Zacks Rank #2.
Adobe has gained 41.6% over a year. It delivered a trailing four-quarter earnings surprise of 3.03%, on average. The Zacks Consensus Estimate for ADBE’s fiscal 2024 earnings has been unchanged at $17.89 per share over the past 30 days.
Get the remaining stocks on the list and start testing this and other ideas. 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 of 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.