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4 GARP Stocks That Investors Can Scoop Up for Maximum 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%.
RL, EXPE, NVDA and LRCX 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. Ralph Lauren (RL - Free Report) , EXPEDIA GROUP (EXPE - Free Report) , NVIDIA (NVDA - Free Report) and Lam Research (LRCX - 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 take 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 15 that made it through the screening process.
Expedia Group entered the holiday quarter with raised full-year guidance, a key near-term stock catalyst. The company now projects 2026 gross bookings of $131.4-$131.9 billion, revenues of $16.37-$16.43 billion and adjusted EBITDA margin expansion of 1.8-2 points. The fourth-quarter guidance calls for revenues of $3.69-$3.75 billion and adjusted EBITDA of $830-$880 million. Product momentum supports demand.
The Fall 2026 release added more than 30 new and enhanced features, including AI Compare, Activity Planner and Vrbo’s AI Voice Agent. In B2B, the Rapid Activities API, enhanced by Tiqets inventory, entered beta, with general availability planned for early 2027. Tiqets activities also reached select UK travel agencies through Expedia TAAP in beta. A $0.48 quarterly dividend, to be paid out on Dec. 10, supports ongoing shareholder returns.
The consensus estimate for EXPE’s 2026 earnings has moved north by 0.9% to $20.84 per share in the past 60 days. This Zacks Rank #1 company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 15.26%.
Ralph Lauren entered the holiday season with raised fiscal 2027 guidance, constant-currency revenue growth centered around 6% to 7% on a 52-week basis, and operating margin expansion of 80 to 100 basis points. Third-quarter growth is guided to be 3% to 4%, including about one point of drag from wholesale timing and off-price reductions. Its Asia initiatives include the Japan app launch and Polofest in Tokyo, the first activation ahead of the brand’s 60th anniversary in 2027. Inventory is down 9% year over year, and $500 million of repurchases completed fiscal 2027 buyback plans, alongside a $1 quarterly dividend. Tariff uncertainty and softer European comparable sales remain risks, while leadership realignments effective Nov. 29 aim to sharpen execution across operations, product and AI.
The consensus estimate for RL’s fiscal 2027 earnings per share has moved south by 0.3% to $18.72 in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 8.44%.
NVIDIA’s near-term setup rests on guidance and product ramps. Management projects third-quarter fiscal 2027 revenues of $108 billion, plus or minus 2%, with gross margin near 74.0%, while assuming no China Data Center compute revenues. Vera Rubin, in full production, is running at cloud partners including CoreWeave, Google Cloud and Microsoft Azure. In October, NVIDIA’s MGX 1.2 rack specification added support for deployments up to 250kW, and Meta is adopting Spectrum-6 Ethernet switches. In September, NVIDIA launched an open agent-safety platform, and the board added $150 billion to the buyback authorization, leaving $235 billion. Leadership is the swing factor. Jensen Huang’s Nov. 12 resignation makes CFO Colette Kress interim CEO, though the board expects roadmap continuity.
The Zacks Consensus Estimate for NVDA’s fiscal 2027 earnings per share has moved south by 3.4% to $9.28 in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in all four trailing quarters, the average surprise being 5.82%.
Lam Research’s near-term setup rests on guidance and capacity readiness. Its December-quarter guidance calls for revenues of $8.6 billion, plus or minus $400 million, with non-GAAP gross margin of 52.5% and EPS of $2.33, plus or minus 15 cents. Management links demand to AI-driven device complexity. The Oct. 27 imec collaboration targets 3D integration and Aether dry resist for high-NA EUV patterning, broadening technology relevance. The company also expects to outgrow wafer fabrication equipment spending. A new 470,000-square-foot Livermore logistics hub, retrieving parts in under 30 seconds, should help the company respond to demand shifts. Capital return, which includes a $25 billion repurchase authorization and a $0.33 quarterly dividend, to be paid out on Jan. 6, 2027, adds support. Execution against guidance, however, remains the key variable.
The Zacks Consensus Estimate for LRCX’s fiscal 2027 earnings has moved north by 3% to $9.60 per share in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in all four trailing quarters, the average surprise being 6.43%.
View the Zacks #1 Rank List
Image: Bigstock
4 GARP Stocks That Investors Can Scoop Up for Maximum 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. Ralph Lauren (RL - Free Report) , EXPEDIA GROUP (EXPE - Free Report) , NVIDIA (NVDA - Free Report) and Lam Research (LRCX - 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 take 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 15 that made it through the screening process.
Expedia Group entered the holiday quarter with raised full-year guidance, a key near-term stock catalyst. The company now projects 2026 gross bookings of $131.4-$131.9 billion, revenues of $16.37-$16.43 billion and adjusted EBITDA margin expansion of 1.8-2 points. The fourth-quarter guidance calls for revenues of $3.69-$3.75 billion and adjusted EBITDA of $830-$880 million. Product momentum supports demand.
The Fall 2026 release added more than 30 new and enhanced features, including AI Compare, Activity Planner and Vrbo’s AI Voice Agent. In B2B, the Rapid Activities API, enhanced by Tiqets inventory, entered beta, with general availability planned for early 2027. Tiqets activities also reached select UK travel agencies through Expedia TAAP in beta. A $0.48 quarterly dividend, to be paid out on Dec. 10, supports ongoing shareholder returns.
The consensus estimate for EXPE’s 2026 earnings has moved north by 0.9% to $20.84 per share in the past 60 days. This Zacks Rank #1 company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 15.26%.
Ralph Lauren entered the holiday season with raised fiscal 2027 guidance, constant-currency revenue growth centered around 6% to 7% on a 52-week basis, and operating margin expansion of 80 to 100 basis points. Third-quarter growth is guided to be 3% to 4%, including about one point of drag from wholesale timing and off-price reductions. Its Asia initiatives include the Japan app launch and Polofest in Tokyo, the first activation ahead of the brand’s 60th anniversary in 2027. Inventory is down 9% year over year, and $500 million of repurchases completed fiscal 2027 buyback plans, alongside a $1 quarterly dividend. Tariff uncertainty and softer European comparable sales remain risks, while leadership realignments effective Nov. 29 aim to sharpen execution across operations, product and AI.
The consensus estimate for RL’s fiscal 2027 earnings per share has moved south by 0.3% to $18.72 in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 8.44%.
NVIDIA’s near-term setup rests on guidance and product ramps. Management projects third-quarter fiscal 2027 revenues of $108 billion, plus or minus 2%, with gross margin near 74.0%, while assuming no China Data Center compute revenues. Vera Rubin, in full production, is running at cloud partners including CoreWeave, Google Cloud and Microsoft Azure. In October, NVIDIA’s MGX 1.2 rack specification added support for deployments up to 250kW, and Meta is adopting Spectrum-6 Ethernet switches. In September, NVIDIA launched an open agent-safety platform, and the board added $150 billion to the buyback authorization, leaving $235 billion. Leadership is the swing factor. Jensen Huang’s Nov. 12 resignation makes CFO Colette Kress interim CEO, though the board expects roadmap continuity.
The Zacks Consensus Estimate for NVDA’s fiscal 2027 earnings per share has moved south by 3.4% to $9.28 in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in all four trailing quarters, the average surprise being 5.82%.
Lam Research’s near-term setup rests on guidance and capacity readiness. Its December-quarter guidance calls for revenues of $8.6 billion, plus or minus $400 million, with non-GAAP gross margin of 52.5% and EPS of $2.33, plus or minus 15 cents. Management links demand to AI-driven device complexity. The Oct. 27 imec collaboration targets 3D integration and Aether dry resist for high-NA EUV patterning, broadening technology relevance. The company also expects to outgrow wafer fabrication equipment spending. A new 470,000-square-foot Livermore logistics hub, retrieving parts in under 30 seconds, should help the company respond to demand shifts. Capital return, which includes a $25 billion repurchase authorization and a $0.33 quarterly dividend, to be paid out on Jan. 6, 2027, adds support. Execution against guidance, however, remains the key variable.
The Zacks Consensus Estimate for LRCX’s fiscal 2027 earnings has moved north by 3% to $9.60 per share in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in all four trailing quarters, the average surprise being 6.43%.