Millions of People Will Be Blindsided in 2022. Will You Be One of Them?

On December 7, Louis Navellier, Eric Fry & Luke Lango will reveal the major events that will rock the markets in 2022. Will your money be safe?

Tue, December 7 at 7:00PM ET
 
 
 
 

Invest in These Top 4 GARP Stocks Now

Investors on the lookout for stocks that have the potential to offer the best growth as well as value investing may consider the growth at a reasonable price or GARP strategy.

Invest in These Top 4 GARP Stocks Now

Source: Shutterstock

This well-liked strategy helps investors gain exposure to stocks that have impressive growth prospects but are trading at a discount. Unlike the blend strategy, a portfolio created on the GARP way of investing is expected to help find stocks that offer the best of both value and growth investing.

GARP Metrics – Mix of Growth & Value Metrics

The GARP approach prefers stocks that are 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

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, picking stocks with a more stable and reasonable growth rate is a preferred tactic of GARP investors. Hence, growth rates between 10% and 20% are considered ideal under the strategy.

Another growth metric that is considered by both growth and GARP investors is return on equity (ROE). GARP investors look for strong and higher ROE compared to the industry average to identify superior stocks. Moreover, stocks with positive cash flow find precedence under the GARP plan.

Value Metrics

GARP investing gives priority to one of the popular value metrics – price-to-earnings (P/E) ratio. Though this investing style picks stocks with higher P/E ratios compared to value investors, it avoids companies with extremely high P/E ratios. Moreover, the price-to-book value (P/B) ratio is another value metric that is considered.

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 favorable Zacks Rank #1 (Strong Buy) or 2 (Buy).

Last 5-year EPS & projected 3–5 year EPS growth rates between 10% and 20% (Strong EPS growth history and prospects ensure improving business.)

ROE (over the past 12 months) greater than the industry average (Higher ROE compared to the industry average indicates superior stocks.)

P/E and P/B ratios less than M-industry average (P/E and P/B ratios less than that of the industry indicates that the stocks are undervalued.)

These few criteria have narrowed down the universe of over 7,700 stocks to only eight.

Here are four stocks that made it through the screen:

Los Angeles, CA-based CBRE Group Inc (NYSE:CBG) operates as a commercial real estate services and investment company. It has an average four-quarter positive earnings surprise of 18.71% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

MSCI Inc. (NYSE:MSCI) is a leading provider of investment decision support tools to investment institutions worldwide. The company has an average four-quarter positive earnings surprise of 5.60% and a Zacks Rank #2.

Home Depot Inc (NYSE:HD) is the one of world’s largest home improvement retailer. The company has an average four-quarter positive earnings surprise of 3.77% and carries a Zacks Rank #2.

Cintas Corporation (NASDAQ:CTAS) is a provider of corporate identity uniforms through rental and sales programs as well as a provider of related business services. The company has an average four-quarter positive earnings surprise of 6.96% and carries a Zacks Rank #2.

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.

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.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »


Article printed from InvestorPlace Media, https://investorplace.com/2017/10/invest-these-top-4-garp-stocks-now-ggsyn/.

©2021 InvestorPlace Media, LLC