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Add These 4 GARP Stocks to Your Portfolio to Receive Handsome 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%.
GE, HWM, COR and CAKE represent promising GARP opportunities with strong fundamentals.
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 of value and growth investing. GE Aerospace (GE - Free Report) , Howmet Aerospace (HWM - Free Report) , Cencora, Inc. (COR - Free Report) and The Cheesecake Factory (CAKE - 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 20% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is 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 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 25% (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 stocks from the nine that made it through the screening process:
GE Aerospace is a leading designer, developer and producer of jet engines, components and integrated systems for military, commercial and business aircraft. The company is well-known for its aero-derivative gas turbines for marine applications.
GE Aerospace has been witnessing strength in its businesses, driven by robust demand for commercial engines, propulsion and additive technologies. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel augur well for the company. Its portfolio-reshaping actions are likely to unlock value for its shareholders. For 2025, GE Aerospace expects organic revenues to grow in the low-double-digit range from the year-ago level.
This Zacks Rank #1 stock has surged 63.9% in the year-to-date period. It has a trailing four-quarter earnings surprise of 16.07%, on average. The Zacks Consensus Estimate for GE’s 2025 earnings has moved north by 1.7% to $5.87 per share over the past 30 days. You can see the complete list of today's Zacks #1 Rank stocks here.
Howmet Aerospace provides engineered solutions for customers in the transportation and aerospace (both defense and commercial) industries.
Howmet is benefiting from solid momentum in the commercial aerospace market, driven by robust build rates and wide-body aircraft recovery. The company 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, spares and new builds for legacy fighters augur well. Given the strength in most of its served markets, Howmet has built a sound liquidity position that supports its shareholder-friendly policies. In August 2025, the company announced a 20% hike in its quarterly dividend.
This Zacks Rank #2 stock has surged 60.6% in the year-to-date period. It has a trailing four-quarter earnings surprise of 7.08%, on average. The Zacks Consensus Estimate for ’HWM’s 2025 earnings has moved north by 2.9% to $3.57 per share over the past 30 days.
Cencora is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce health care costs and improve patient outcomes.
Cencora has established itself as a leader in specialty products, a critical component of its pharmaceutical-centric strategy. Specialty products in COR’s portfolio include biologics, biosimilars, cell and gene therapies, plasma-derived medicines, and complex injectables. These therapies, often high-cost and requiring specialized distribution, contribute significantly to the company’s revenue and growth strategy. Cencora continues to enhance its distribution network to drive supply chain efficiency, ensuring secure, timely, and cost-effective delivery of pharmaceuticals. The company is also experiencing significant growth, driven by the strong demand for GLP-1 therapies, which are widely used for diabetes and weight management. These high-value specialty medications have positively impacted both top- and bottom-line growth, contributing to increased revenues and margins.
This Zacks Rank #2 stock has surged 29.3% in the year-to-date period. It has a trailing four-quarter earnings surprise of 6.19%, on average. The Zacks Consensus Estimate for COR’s 2025 fiscal earnings has moved north by 0.4% to $15.88 per share over the past 30 days.
The Cheesecake Factory owns and operates a popular chain of restaurants, known for their extensive food menus and a wide variety of cheesecakes, as well as a separate bakery division that supplies desserts to their restaurants and retailers globally.
Following the acquisition of Fox Restaurant Concepts (FRC), the company has continued to demonstrate confidence in its future growth through the performance and development of these brands. CAKE's long-term growth strategy relies heavily on FRC concepts, such as Flower Child and North Italia, which provide unique eating experiences. The company is benefiting from higher consumer demand, restaurant openings, strong Flower Child performance and operational efficiency. To boost consumer convenience, CAKE has implemented operational changes and technology upgrades, which include a contactless menu, payment technology and text paging.
This Zacks Rank #2 stock has surged 30.5% in the year-to-date period. It has a trailing four-quarter earnings surprise of 15.17%, on average. The Zacks Consensus Estimate for CAKE’s fiscal 2025 earnings has moved north by 2.2% to $3.76 per share over the past 30 days.
You can get the remaining stocks 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
Add These 4 GARP Stocks to Your Portfolio to Receive Handsome Returns
Key Takeaways
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 of value and growth investing. GE Aerospace (GE - Free Report) , Howmet Aerospace (HWM - Free Report) , Cencora, Inc. (COR - Free Report) and The Cheesecake Factory (CAKE - 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 20% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is 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 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 25% (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 stocks from the nine that made it through the screening process:
GE Aerospace is a leading designer, developer and producer of jet engines, components and integrated systems for military, commercial and business aircraft. The company is well-known for its aero-derivative gas turbines for marine applications.
GE Aerospace has been witnessing strength in its businesses, driven by robust demand for commercial engines, propulsion and additive technologies. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel augur well for the company. Its portfolio-reshaping actions are likely to unlock value for its shareholders. For 2025, GE Aerospace expects organic revenues to grow in the low-double-digit range from the year-ago level.
This Zacks Rank #1 stock has surged 63.9% in the year-to-date period. It has a trailing four-quarter earnings surprise of 16.07%, on average. The Zacks Consensus Estimate for GE’s 2025 earnings has moved north by 1.7% to $5.87 per share over the past 30 days. You can see the complete list of today's Zacks #1 Rank stocks here.
Howmet Aerospace provides engineered solutions for customers in the transportation and aerospace (both defense and commercial) industries.
Howmet is benefiting from solid momentum in the commercial aerospace market, driven by robust build rates and wide-body aircraft recovery. The company 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, spares and new builds for legacy fighters augur well. Given the strength in most of its served markets, Howmet has built a sound liquidity position that supports its shareholder-friendly policies. In August 2025, the company announced a 20% hike in its quarterly dividend.
This Zacks Rank #2 stock has surged 60.6% in the year-to-date period. It has a trailing four-quarter earnings surprise of 7.08%, on average. The Zacks Consensus Estimate for ’HWM’s 2025 earnings has moved north by 2.9% to $3.57 per share over the past 30 days.
Cencora is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce health care costs and improve patient outcomes.
Cencora has established itself as a leader in specialty products, a critical component of its pharmaceutical-centric strategy. Specialty products in COR’s portfolio include biologics, biosimilars, cell and gene therapies, plasma-derived medicines, and complex injectables. These therapies, often high-cost and requiring specialized distribution, contribute significantly to the company’s revenue and growth strategy. Cencora continues to enhance its distribution network to drive supply chain efficiency, ensuring secure, timely, and cost-effective delivery of pharmaceuticals. The company is also experiencing significant growth, driven by the strong demand for GLP-1 therapies, which are widely used for diabetes and weight management. These high-value specialty medications have positively impacted both top- and bottom-line growth, contributing to increased revenues and margins.
This Zacks Rank #2 stock has surged 29.3% in the year-to-date period. It has a trailing four-quarter earnings surprise of 6.19%, on average. The Zacks Consensus Estimate for COR’s 2025 fiscal earnings has moved north by 0.4% to $15.88 per share over the past 30 days.
The Cheesecake Factory owns and operates a popular chain of restaurants, known for their extensive food menus and a wide variety of cheesecakes, as well as a separate bakery division that supplies desserts to their restaurants and retailers globally.
Following the acquisition of Fox Restaurant Concepts (FRC), the company has continued to demonstrate confidence in its future growth through the performance and development of these brands. CAKE's long-term growth strategy relies heavily on FRC concepts, such as Flower Child and North Italia, which provide unique eating experiences. The company is benefiting from higher consumer demand, restaurant openings, strong Flower Child performance and operational efficiency. To boost consumer convenience, CAKE has implemented operational changes and technology upgrades, which include a contactless menu, payment technology and text paging.
This Zacks Rank #2 stock has surged 30.5% in the year-to-date period. It has a trailing four-quarter earnings surprise of 15.17%, on average. The Zacks Consensus Estimate for CAKE’s fiscal 2025 earnings has moved north by 2.2% to $3.76 per share over the past 30 days.
You can get the remaining stocks 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.