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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. ResMed (RMD - Free Report) , Booz Allen Hamilton (BAH - Free Report) and Kontoor Brands (KTB - Free Report) are some GARP stocks that hold promise.
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 5% and 20% ideal.
Another metric considered by growth and GARP investors is the 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).
Last five-year EPS & projected 3-5-year EPS growth rates between 5% and 20% (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 three stocks that made it through the screen:
ResMed is a designer, manufacturer, and distributor in the worldwide market for generators, masks and related accessories for the treatment of sleep-disordered breathing and other respiratory disorders. The company currently sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
ResMed has gained 26% on a year-to-date basis. It has a trailing four-quarter earnings surprise of 2.8% on average. The Zacks Consensus Estimate for RMD’s fiscal 2024 earnings has moved 2% north to $7.59 per share over the past 30 days.
Booz Allen Hamilton is a provider of management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber expertise to the United States and international governments, corporations and not-for-profit organizations. The company currently carries a Zacks Rank #2.
Booz Allen Hamilton has gained 18.8% year to date. It has a trailing four-quarter earnings surprise of 12.7%, on average. The Zacks Consensus Estimate for 2024 earnings has moved 0.6% north to $5.39 per share over the past 30 days.
Kontoor Brands is an apparel company that designs, manufactures and distributes products. The company's brand consists of Wrangler, Lee and Rock & Republic. The company currently carries a Zacks Rank #2.
Kontoor Brands has gained 9.4% year to date. It delivered a trailing four-quarter earnings surprise of 13.02%, on average. The Zacks Consensus Estimate for KTB’s 2024 earnings has moved 0.4% north to $4.73 per share in the past 30 days.
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.
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3 GARP Stocks to Scoop up for Maximum Returns
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. ResMed (RMD - Free Report) , Booz Allen Hamilton (BAH - Free Report) and Kontoor Brands (KTB - Free Report) are some GARP stocks that hold promise.
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 5% and 20% ideal.
Another metric considered by growth and GARP investors is the 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).
Last five-year EPS & projected 3-5-year EPS growth rates between 5% and 20% (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 three stocks that made it through the screen:
ResMed is a designer, manufacturer, and distributor in the worldwide market for generators, masks and related accessories for the treatment of sleep-disordered breathing and other respiratory disorders. The company currently sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
ResMed has gained 26% on a year-to-date basis. It has a trailing four-quarter earnings surprise of 2.8% on average. The Zacks Consensus Estimate for RMD’s fiscal 2024 earnings has moved 2% north to $7.59 per share over the past 30 days.
Booz Allen Hamilton is a provider of management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber expertise to the United States and international governments, corporations and not-for-profit organizations. The company currently carries a Zacks Rank #2.
Booz Allen Hamilton has gained 18.8% year to date. It has a trailing four-quarter earnings surprise of 12.7%, on average. The Zacks Consensus Estimate for 2024 earnings has moved 0.6% north to $5.39 per share over the past 30 days.
Kontoor Brands is an apparel company that designs, manufactures and distributes products. The company's brand consists of Wrangler, Lee and Rock & Republic. The company currently carries a Zacks Rank #2.
Kontoor Brands has gained 9.4% year to date. It delivered a trailing four-quarter earnings surprise of 13.02%, on average. The Zacks Consensus Estimate for KTB’s 2024 earnings has moved 0.4% north to $4.73 per share in the past 30 days.
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 to 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.