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3 GARP Stocks That Investors Can Scoop Up for Maximum Returns
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Key Takeaways
GARP strategy identifies undervalued stocks with solid growth prospects for maximum returns.
GARP combines value metrics like P/E ratios with growth rates between 10% and 25%.
SFM, HWM and ANET represent promising GARP opportunities with strong fundamentals.
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. GARP stocks have solid prospects in terms of cash flow, revenues, earnings per share (EPS) and other metrics.
A portfolio based on the GARP strategy comprises stocks that offer the best value and growth investment. Sprouts Farmers Market (SFM - Free Report) , Howmet Aerospace (HWM - Free Report) and Arista Networks (ANET - Free Report) are some promising GARP stocks.
GARP Metrics — Mix of Growth & Value Metrics
The GARP strategy offers ideal investment options utilizing the best value and growth investing features. 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, etc.
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. The GARP strategy considers growth rates between 10% and 20% ideal.
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. The investing style picks stocks with higher P/E ratios than value investors but 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.
Last five-year EPS & projected 3-5-year EPS growth rates between 10% and 25% (Strong EPS growth history and prospects ensure improving business.)
ROE (in the past 12 months) greater than the industry average (Higher ROE than the industry average indicates superior stocks.)
P/E and P/B ratios are less than the M-industry average (P/E and P/B ratios less than the industry indicate that the stocks are undervalued.)
Here are the three stocks out of the four that made it through the screen.
Sprouts Farmers Market’s commitment to providing fresh produce and health-oriented products aligns with increasing consumer demand for healthier food options. The overall market for natural and organic food at home, which SFM targets, is estimated to be around $290 billion within the total $1.6 trillion spent on food at home. Its private-label products continue to gain traction, accounting for 24% of total sales, with 300 new items launched last year, fostering customer loyalty. To strengthen customer relationships, SFM has initiated the rollout of its new loyalty program, which is already showing positive signs. Piloted in 35 stores in late 2024, the program achieved sign-ups and scan rates above internal targets. A broader launch will begin in the second half of 2025, starting in Arizona.
Sprouts Farmers plans to open at least 35 new stores in 2025, targeting approximately 10%-unit growth, supported by a robust pipeline of 120 approved sites and more than 85 signed leases. Embracing a multi-channel approach, Sprouts Farmers continues to adapt to shifting consumer shopping habits. Significant investments in digital infrastructure, online ordering and delivery services have enhanced customer accessibility.
This Zacks Rank #1 stock has returned 25.7% in the year-to-date period. It has a trailing four-quarter earnings surprise of 16.5%, on average. The Zacks Consensus Estimate for SFM’s 2025 earnings has moved north by 1.4% to $5.08 per share over the past 30 days.
Howmet Aerospace provides engineered solutions for customers in the transportation and aerospace (both defense and commercial) industries. Notably, it offers forged wheels for commercial use in the transportation industry. It also provides aerospace fastening systems, components used in jet engines and structural parts made of titanium used in defense and aerospace applications.
Howmet Aerospace is benefiting from solid momentum in the commercial aerospace market, driven by robust build rates and wide-body aircraft recovery. HWM is also witnessing strength in its defense aerospace business on the back of rising U.S. & international defense budgets. Robust orders for engine spares for the F-35 program and spares and new builds for legacy fighters augur well for HWM.
Given the strength in most of its served markets, HWM has built a sound liquidity position that supports its shareholder-friendly policies. HWM raised its 2025 adjusted earnings per share (EPS) outlook following a solid first-quarter 2025 performance, reflecting confidence in its operational execution and exposure to flourishing aerospace markets. The company increased its full-year EPS guidance to $3.36-$3.44 from $3.13-$3.21 expected earlier.
This Zacks Rank #1 stock has surged 56.1% in the year-to-date period. It has a trailing four-quarter earnings surprise of 8.84%, on average. The Zacks Consensus Estimate for HWM’s 2025 earnings has moved north by 0.6% to $3.46 per share over the past 30 days.
Arista Networks is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
Arista is benefiting from positive demand trends owing to its strong product portfolio, which is highly scalable and programmable and provides data-driven automation, analytics and support services. Its cloud networking solutions provide predictable performance and programmability, enabling seamless integration with third-party applications for network management, automation and orchestration. The growing demand for 200- and 400-gig high-performance switching products augurs well for long-term growth. Improved supply chain management is a positive.
This Zacks Rank #2 stock has declined 14.8% in the year-to-date period. It has a trailing four-quarter earnings surprise of 11.82%, on average. The Zacks Consensus Estimate for ANET’s 2025 earnings has remained steady at $2.56 per share over the past 30 days.
You can get the remaining stock on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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.
Image: Bigstock
3 GARP Stocks That Investors Can Scoop Up for Maximum Returns
Key Takeaways
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. GARP stocks have solid prospects in terms of cash flow, revenues, earnings per share (EPS) and other metrics.
A portfolio based on the GARP strategy comprises stocks that offer the best value and growth investment. Sprouts Farmers Market (SFM - Free Report) , Howmet Aerospace (HWM - Free Report) and Arista Networks (ANET - Free Report) are some promising GARP stocks.
GARP Metrics — Mix of Growth & Value Metrics
The GARP strategy offers ideal investment options utilizing the best value and growth investing features. 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, etc.
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. The GARP strategy considers growth rates between 10% and 20% ideal.
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. The investing style picks stocks with higher P/E ratios than value investors but 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). You can see the complete list of today's Zacks #1 Rank stocks here.
Last five-year EPS & projected 3-5-year EPS growth rates between 10% and 25% (Strong EPS growth history and prospects ensure improving business.)
ROE (in the past 12 months) greater than the industry average (Higher ROE than the industry average indicates superior stocks.)
P/E and P/B ratios are less than the M-industry average (P/E and P/B ratios less than the industry indicate that the stocks are undervalued.)
Here are the three stocks out of the four that made it through the screen.
Sprouts Farmers Market’s commitment to providing fresh produce and health-oriented products aligns with increasing consumer demand for healthier food options. The overall market for natural and organic food at home, which SFM targets, is estimated to be around $290 billion within the total $1.6 trillion spent on food at home. Its private-label products continue to gain traction, accounting for 24% of total sales, with 300 new items launched last year, fostering customer loyalty. To strengthen customer relationships, SFM has initiated the rollout of its new loyalty program, which is already showing positive signs. Piloted in 35 stores in late 2024, the program achieved sign-ups and scan rates above internal targets. A broader launch will begin in the second half of 2025, starting in Arizona.
Sprouts Farmers plans to open at least 35 new stores in 2025, targeting approximately 10%-unit growth, supported by a robust pipeline of 120 approved sites and more than 85 signed leases. Embracing a multi-channel approach, Sprouts Farmers continues to adapt to shifting consumer shopping habits. Significant investments in digital infrastructure, online ordering and delivery services have enhanced customer accessibility.
This Zacks Rank #1 stock has returned 25.7% in the year-to-date period. It has a trailing four-quarter earnings surprise of 16.5%, on average. The Zacks Consensus Estimate for SFM’s 2025 earnings has moved north by 1.4% to $5.08 per share over the past 30 days.
Howmet Aerospace provides engineered solutions for customers in the transportation and aerospace (both defense and commercial) industries. Notably, it offers forged wheels for commercial use in the transportation industry. It also provides aerospace fastening systems, components used in jet engines and structural parts made of titanium used in defense and aerospace applications.
Howmet Aerospace is benefiting from solid momentum in the commercial aerospace market, driven by robust build rates and wide-body aircraft recovery. HWM is also witnessing strength in its defense aerospace business on the back of rising U.S. & international defense budgets. Robust orders for engine spares for the F-35 program and spares and new builds for legacy fighters augur well for HWM.
Given the strength in most of its served markets, HWM has built a sound liquidity position that supports its shareholder-friendly policies. HWM raised its 2025 adjusted earnings per share (EPS) outlook following a solid first-quarter 2025 performance, reflecting confidence in its operational execution and exposure to flourishing aerospace markets. The company increased its full-year EPS guidance to $3.36-$3.44 from $3.13-$3.21 expected earlier.
This Zacks Rank #1 stock has surged 56.1% in the year-to-date period. It has a trailing four-quarter earnings surprise of 8.84%, on average. The Zacks Consensus Estimate for HWM’s 2025 earnings has moved north by 0.6% to $3.46 per share over the past 30 days.
Arista Networks is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
Arista is benefiting from positive demand trends owing to its strong product portfolio, which is highly scalable and programmable and provides data-driven automation, analytics and support services. Its cloud networking solutions provide predictable performance and programmability, enabling seamless integration with third-party applications for network management, automation and orchestration. The growing demand for 200- and 400-gig high-performance switching products augurs well for long-term growth. Improved supply chain management is a positive.
This Zacks Rank #2 stock has declined 14.8% in the year-to-date period. It has a trailing four-quarter earnings surprise of 11.82%, on average. The Zacks Consensus Estimate for ANET’s 2025 earnings has remained steady at $2.56 per share over the past 30 days.
You can get the remaining stock on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.
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.