Core Insights - The GARP (Growth at a Reasonable Price) strategy combines value and growth investing, focusing on undervalued stocks with solid growth prospects [1][2][7] GARP Strategy Overview - GARP investing aims to provide an ideal investment by utilizing features from both value and growth investing, targeting stocks priced below market value with strong cash flow and earnings potential [3][4] - Ideal growth rates for GARP investors are between 10% and 20%, focusing on stable growth rather than super-normal rates [3] Screening Parameters - Stocks selected under the GARP strategy must have a Zacks Rank of 1 (Strong Buy) or 2 (Buy), with last 5-year EPS and projected 3-5 year EPS growth rates between 10% and 25% [6] - A return on equity (ROE) greater than the industry average and P/E and P/B ratios less than the industry average are also key criteria [6] Promising GARP Stocks - GE Aerospace is experiencing strong demand for commercial engines and expects organic revenue growth in the low-double-digit range for 2025, with a year-to-date stock surge of 62.1% [9][10] - Autodesk is benefiting from new business growth and strong demand for its cloud-based products, with a year-to-date return of 3.7% [12][13] - Adobe's tools are gaining traction, with over 700 million monthly active users, although the stock has declined 16.6% year-to-date [14][16] - Sprouts Farmers Market is well-positioned in the natural and organic food market, planning to open at least 35 new stores in 2025, with a year-to-date return of 23.5% [17][18][19]

Core Insights - The article discusses the investment strategy of GARP (Growth at a Reasonable Price) as a hybrid approach that combines elements of both value and growth investing, particularly in uncertain market conditions [2][3][5]. Investment Strategy - GARP investing prioritizes the PEG (Price/Earnings Growth) ratio, which relates a stock's P/E ratio to its future earnings growth rate, providing a more comprehensive view of a stock's potential [5][6]. - A lower PEG ratio, ideally below 1, indicates both undervaluation and future growth potential, making it attractive for GARP investors [6]. Stock Performance - Several stocks have shown significant success using the GARP strategy, including Takeda Pharmaceutical, Five9, LATAM Airlines, and Mizuho Financial Group [4]. - Takeda Pharmaceutical has a Zacks Rank of 1, a Value Score of A, and a long-term expected growth rate of 35% [11]. - Five9 holds a Zacks Rank of 2, a Value Score of B, and a historical growth rate of 19.3% [13]. - LATAM Airlines also has a Zacks Rank of 1, a Value Score of A, and an expected growth rate of 14.8% [14]. - Mizuho Financial has a Zacks Rank of 2, a Value Score of B, and a long-term expected growth rate of 15.9% [16]. Screening Criteria - Effective GARP investing involves screening for stocks with a PEG ratio less than the industry median, a P/E ratio below the industry median, a Zacks Rank of 1 or 2, a market capitalization greater than $1 billion, and an average 20-day trading volume exceeding 50,000 [8][9].