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4 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%.
RGLD, HWM, JBL and MA 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. Royal Gold (RGLD - Free Report) , Howmet Aerospace (HWM - Free Report) , Jabil (JBL - Free Report) and Mastercard (MA - 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 four out of the eight stocks that made it through the screen.
Royal Gold has been benefiting from its solid streaming agreements. It maintains a strong balance sheet, which is likely to drive growth in the upcoming quarters. It is focused on allocating its strong cash flow to dividends, debt reduction and new businesses. Gold prices are currently at around $3,380 per ounce as U.S. tariff policies continue to drive safe-haven demand. Silver has also gained on the back of the recent expansion seen in the U.S. manufacturing sector. This rise in metal prices will likely boost the company’s results in the coming quarters.
RGLD is planning to acquire Sandstorm Gold in an all-stock deal, wherein it is offering 0.0625 Royal Gold shares for each Sandstorm share. RGLD has also inked a $196-million cash deal to buy Horizon Copper. Both transactions are expected to complete in the fourth quarter of 2025. The addition of these assets from SAND and Horizon Copper will create a uniquely diversified global precious metals portfolio for Royal Gold with significant growth and exploration potential.
This Zacks Rank #1 stock has returned 21.2% in the year-to-date period. It has a trailing four-quarter earnings surprise of 9.04%, on average. The Zacks Consensus Estimate for RGLD’s 2025 earnings has moved 4.5% north to $7.47 per share over the past 30 days.
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. and international defense budgets. Steady 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 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 the $3.13-$3.21 stated earlier.
This Zacks Rank #1 stock has soared 63.2% 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 0.3% north to $3.47 per share over the past 30 days.
Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target that “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable.
JBL’s high free cash flow indicates efficient financial management practices, optimum utilization of assets and improved operational efficiency. Massive application of generative AI is set to drastically increase the efficiency of JBL’s automated optical inspection machines for the automation industry. A large-scale portfolio of business sectors offers JBL a high degree of resiliency during times of macroeconomic and geopolitical disruption.
This Zacks Rank #1 stock has surged 53.6% in the year-to-date period. It has a trailing four-quarter earnings surprise of 6.68%, on average. The Zacks Consensus Estimate for JBL’s fiscal 2025 earnings has moved north by 4.7% to $9.35 per share over the past 30 days.
Mastercard’s acquisitions are helping it grow addressable markets and create new revenue streams. We expect MA’s net revenues to rise 13% year over year in 2025. The accelerated adoption of digital and contactless solutions is providing an opportunity for MA’s business to expedite its shift to the digital mode. A strong cash flow supports its growth initiatives.
Mastercard is strengthening its partnership with fintech companies in Africa, the Pacific Asia and Latin America, aiming to tap into growth of the most dynamic digital finance markets. Mastercard is also stepping up by introducing Buy Now Pay Later options specifically designed for emerging markets, aimed at meeting the rising demand for flexible credit.
This Zacks Rank #2 stock has returned 7% in the year-to-date period. It has a trailing four-quarter earnings surprise of 3.71%, on average. The Zacks Consensus Estimate for MA’s 2025 earnings has moved 0.1% north to $15.99 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
4 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. Royal Gold (RGLD - Free Report) , Howmet Aerospace (HWM - Free Report) , Jabil (JBL - Free Report) and Mastercard (MA - 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 four out of the eight stocks that made it through the screen.
Royal Gold has been benefiting from its solid streaming agreements. It maintains a strong balance sheet, which is likely to drive growth in the upcoming quarters. It is focused on allocating its strong cash flow to dividends, debt reduction and new businesses. Gold prices are currently at around $3,380 per ounce as U.S. tariff policies continue to drive safe-haven demand. Silver has also gained on the back of the recent expansion seen in the U.S. manufacturing sector. This rise in metal prices will likely boost the company’s results in the coming quarters.
RGLD is planning to acquire Sandstorm Gold in an all-stock deal, wherein it is offering 0.0625 Royal Gold shares for each Sandstorm share. RGLD has also inked a $196-million cash deal to buy Horizon Copper. Both transactions are expected to complete in the fourth quarter of 2025. The addition of these assets from SAND and Horizon Copper will create a uniquely diversified global precious metals portfolio for Royal Gold with significant growth and exploration potential.
This Zacks Rank #1 stock has returned 21.2% in the year-to-date period. It has a trailing four-quarter earnings surprise of 9.04%, on average. The Zacks Consensus Estimate for RGLD’s 2025 earnings has moved 4.5% north to $7.47 per share over the past 30 days.
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. and international defense budgets. Steady 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 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 the $3.13-$3.21 stated earlier.
This Zacks Rank #1 stock has soared 63.2% 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 0.3% north to $3.47 per share over the past 30 days.
Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target that “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable.
JBL’s high free cash flow indicates efficient financial management practices, optimum utilization of assets and improved operational efficiency. Massive application of generative AI is set to drastically increase the efficiency of JBL’s automated optical inspection machines for the automation industry. A large-scale portfolio of business sectors offers JBL a high degree of resiliency during times of macroeconomic and geopolitical disruption.
This Zacks Rank #1 stock has surged 53.6% in the year-to-date period. It has a trailing four-quarter earnings surprise of 6.68%, on average. The Zacks Consensus Estimate for JBL’s fiscal 2025 earnings has moved north by 4.7% to $9.35 per share over the past 30 days.
Mastercard’s acquisitions are helping it grow addressable markets and create new revenue streams. We expect MA’s net revenues to rise 13% year over year in 2025. The accelerated adoption of digital and contactless solutions is providing an opportunity for MA’s business to expedite its shift to the digital mode. A strong cash flow supports its growth initiatives.
Mastercard is strengthening its partnership with fintech companies in Africa, the Pacific Asia and Latin America, aiming to tap into growth of the most dynamic digital finance markets. Mastercard is also stepping up by introducing Buy Now Pay Later options specifically designed for emerging markets, aimed at meeting the rising demand for flexible credit.
This Zacks Rank #2 stock has returned 7% in the year-to-date period. It has a trailing four-quarter earnings surprise of 3.71%, on average. The Zacks Consensus Estimate for MA’s 2025 earnings has moved 0.1% north to $15.99 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.