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Add These 4 GARP Stocks to Your Portfolio to Receive Handsome Returns
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Key Takeaways
The 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%.
TPR, VRT, CLS and COR 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, you can 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. Tapestry (TPR - Free Report) , Vertiv (VRT - Free Report) , Celestica (CLS - Free Report) and Cencora (COR - 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.
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 six that made it through the screening process.
Tapestry raised its full-year fiscal 2026 revenue outlook to approximately $7.95 billion and its operating margin outlook to 23%, citing third-quarter outperformance and an improved fourth-quarter view, with Coach continuing to lead pro forma growth. The April 2026 board appointment of Pinterest's chief technology officer strengthened Tapestry's digital growth strategy.
Reinforcing confidence in cash generation, its board increased planned shareholder returns for the fiscal year and declared a quarterly dividend payable in June 2026. Together, these developments point to durable brand momentum, disciplined execution and strengthening fundamentals that support Tapestry's near-term trajectory.
The Zacks Consensus Estimate for Tapestry’s fiscal 2026 earnings has moved north by 7.8% to $6.95 per share in the past 60 days. This Zacks Rank #1 company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 15.59%.
Vertiv is set to enter the second half of 2026 on a stronger fundamental footing. After raising full-year 2026 guidance in April to net sales of $13.5-$14 billion, organic growth of 29-31% and adjusted EPS of $6.30-$6.40, management used its May investor conference to lift long-term targets further. The company raised its 2030 adjusted operating margin goal to roughly 27%-plus and organic growth CAGR to 20-22%, while expanding planned capital deployment to about $28 billion through 2030. The company also widened its thermal-chain portfolio through April's Strategic Thermal Labs acquisition and June's completed ThermoKey deal, adding liquid-cooling and heat-rejection capabilities for AI data centers. This month also saw a NVIDIA Omniverse DSX digital-twin integration and a new water-reduction fluid service alongside a steady quarterly dividend, supporting shareholders.
The Zacks Consensus Estimate for VRT’s 2026 earnings has moved north by 5.6% to $6.36 per share in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14.65%.
Celestica is likely to be on a solid footing in the near term. The company’s first-quarter revenues were $4.05 billion, up 53% year over year, with adjusted operating margin reaching a record 8.0%. Management responded by raising its full-year 2026 outlook to $19.0 billion for revenues and $10.15 for adjusted earnings per share, citing accelerating Connectivity & Cloud Solutions demand and improving 2027 visibility. Days later, Celestica unveiled its DS6000-series 1.6TbE switches, strengthening its AI networking portfolio for hyperscale customers. In May, the company announced a major Fort Worth, TX manufacturing expansion exceeding one million square feet, which added roughly 1,700 jobs to support surging AI infrastructure demand. An upsized $2.5 billion credit facility reinforces liquidity, positioning Celestica favorably for continued growth.
The consensus estimate for this Zacks Rank #2 company’s 2026 earnings has moved north by 13.6% to $10.16 per share in the past 60 days. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 8.01%.
Cencora enters the second half of fiscal 2026 on a solid fundamental footing. Second-quarter revenues rose to $78.4 billion, with adjusted EPS growing 7.5% year over year. This prompted an upward revision to full-year adjusted EPS guidance, which was later raised again to $17.7–$17.9. The company authorized a new $2 billion buyback program. In April, the divestiture of non-core U.S. hub consulting operations sharpened focus on higher-margin specialty and core distribution businesses. May also brought a smooth CFO leadership transition alongside reaffirmed long-term targets for adjusted operating income and EPS growth. In June, a new agreement supporting U.S. distribution of Kite's CAR T-cell therapies, Yescarta and Tecartus, extends Cencora's specialty distribution footprint further, reinforcing diversified, durable growth momentum into the fiscal year-end.
The consensus estimate for this Zacks Rank #2 company’s fiscal 2026 earnings has moved north by 0.8% to $17.72 per share in the past 60 days. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, the average surprise being 1.59%.
View the Zacks #1 Rank List
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, you can 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. Tapestry (TPR - Free Report) , Vertiv (VRT - Free Report) , Celestica (CLS - Free Report) and Cencora (COR - 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). You can see the complete list of today's Zacks #1 Rank stocks here.
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 six that made it through the screening process.
Tapestry raised its full-year fiscal 2026 revenue outlook to approximately $7.95 billion and its operating margin outlook to 23%, citing third-quarter outperformance and an improved fourth-quarter view, with Coach continuing to lead pro forma growth. The April 2026 board appointment of Pinterest's chief technology officer strengthened Tapestry's digital growth strategy.
Reinforcing confidence in cash generation, its board increased planned shareholder returns for the fiscal year and declared a quarterly dividend payable in June 2026. Together, these developments point to durable brand momentum, disciplined execution and strengthening fundamentals that support Tapestry's near-term trajectory.
The Zacks Consensus Estimate for Tapestry’s fiscal 2026 earnings has moved north by 7.8% to $6.95 per share in the past 60 days. This Zacks Rank #1 company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 15.59%.
Vertiv is set to enter the second half of 2026 on a stronger fundamental footing. After raising full-year 2026 guidance in April to net sales of $13.5-$14 billion, organic growth of 29-31% and adjusted EPS of $6.30-$6.40, management used its May investor conference to lift long-term targets further. The company raised its 2030 adjusted operating margin goal to roughly 27%-plus and organic growth CAGR to 20-22%, while expanding planned capital deployment to about $28 billion through 2030. The company also widened its thermal-chain portfolio through April's Strategic Thermal Labs acquisition and June's completed ThermoKey deal, adding liquid-cooling and heat-rejection capabilities for AI data centers. This month also saw a NVIDIA Omniverse DSX digital-twin integration and a new water-reduction fluid service alongside a steady quarterly dividend, supporting shareholders.
The Zacks Consensus Estimate for VRT’s 2026 earnings has moved north by 5.6% to $6.36 per share in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14.65%.
Celestica is likely to be on a solid footing in the near term. The company’s first-quarter revenues were $4.05 billion, up 53% year over year, with adjusted operating margin reaching a record 8.0%. Management responded by raising its full-year 2026 outlook to $19.0 billion for revenues and $10.15 for adjusted earnings per share, citing accelerating Connectivity & Cloud Solutions demand and improving 2027 visibility. Days later, Celestica unveiled its DS6000-series 1.6TbE switches, strengthening its AI networking portfolio for hyperscale customers. In May, the company announced a major Fort Worth, TX manufacturing expansion exceeding one million square feet, which added roughly 1,700 jobs to support surging AI infrastructure demand. An upsized $2.5 billion credit facility reinforces liquidity, positioning Celestica favorably for continued growth.
The consensus estimate for this Zacks Rank #2 company’s 2026 earnings has moved north by 13.6% to $10.16 per share in the past 60 days. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 8.01%.
Cencora enters the second half of fiscal 2026 on a solid fundamental footing. Second-quarter revenues rose to $78.4 billion, with adjusted EPS growing 7.5% year over year. This prompted an upward revision to full-year adjusted EPS guidance, which was later raised again to $17.7–$17.9. The company authorized a new $2 billion buyback program. In April, the divestiture of non-core U.S. hub consulting operations sharpened focus on higher-margin specialty and core distribution businesses. May also brought a smooth CFO leadership transition alongside reaffirmed long-term targets for adjusted operating income and EPS growth. In June, a new agreement supporting U.S. distribution of Kite's CAR T-cell therapies, Yescarta and Tecartus, extends Cencora's specialty distribution footprint further, reinforcing diversified, durable growth momentum into the fiscal year-end.
The consensus estimate for this Zacks Rank #2 company’s fiscal 2026 earnings has moved north by 0.8% to $17.72 per share in the past 60 days. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, the average surprise being 1.59%.