4 PEG-Based GARP Picks to Weather 2025 Market Uncertainty

Market Overview - The equity market has experienced turbulence due to geopolitical tensions and trade policies, particularly Trump's tariff policies affecting China and the European Union, raising concerns over global supply chains and corporate earnings [1] - The Federal Reserve's decision to maintain interest rates has contributed to market uncertainty, indicating ongoing inflationary pressures that limit monetary policy flexibility [1] Investment Strategies - In times of market instability, investors face the dilemma of choosing between value investing and growth investing, with a notable shift towards a hybrid strategy known as GARP (growth at a reasonable price) [2][4] - GARP investing combines growth and value principles, focusing on stocks that are undervalued yet possess solid growth potential [4] GARP Investment Metrics - The PEG (price/earnings growth) ratio is a key metric in GARP investing, relating a stock's P/E ratio to its future earnings growth rate [5][6] - A lower PEG ratio, ideally below 1, indicates both undervaluation and future growth potential [6] Screening Criteria for GARP Stocks - Successful GARP stocks typically meet several criteria, including a PEG ratio less than the industry median, a P/E ratio below the industry median, a Zacks Rank of 1 (Strong Buy) or 2 (Buy), a market capitalization greater than $1 billion, and an average 20-day trading volume exceeding 50,000 [9][10] Selected Stocks - Gilead Sciences (GILD): A leader in HIV treatment with a Zacks Rank of 2 and a Value Score of B, showing a long-term expected earnings growth rate of 19.5% [11][12] - Exelixis (EXEL): Focused on oncology, with a Zacks Rank of 2 and a Value Score of B, and a long-term expected growth rate of 15.2% [13][14] - Synchrony Financial (SYF): A consumer financial services company with a Zacks Rank of 2 and a Value Score of A, featuring a historical earnings growth rate of 13.1% [15] - Molson Coors (TAP): A global beverage manufacturer with a Zacks Rank of 1 and a Value Score of A, expected long-term earnings growth rate of 6.3% [16]