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4 Discounted PEG Stocks Based on GARP Approach to Smart Investing
ZACKS· 2025-04-16 20:00
Core Viewpoint - The article discusses the effectiveness of a hybrid investing strategy known as GARP (Growth at a Reasonable Price), which combines elements of both value and growth investing, particularly in times of market instability [1][2][4]. GARP Strategy - GARP investing seeks stocks that are undervalued while also having solid sustainable growth potential, utilizing the PEG (Price/Earnings to Growth) ratio as a key metric [4][5]. - A lower PEG ratio, ideally below 1, indicates both undervaluation and future growth potential, making it attractive for GARP investors [6]. Screening Criteria for GARP - Successful GARP investments should meet several criteria, including: - PEG Ratio less than the industry median - P/E Ratio (using F1) less than the industry median - Zacks Rank of 1 (Strong Buy) or 2 (Buy) - Market Capitalization greater than $1 billion - Average 20-Day Volume greater than 50,000 - Percentage Change in F1 Earnings Estimate Revisions (4 Weeks) greater than 5% - Value Score of A or B [8][9]. Selected Stocks - **StoneCo Ltd. (STNE)**: A Brazilian financial technology company with a Zacks Rank of 1 and a Value Score of B, showing a long-term expected earnings growth rate of 26.3% [10][11]. - **BGC Group, Inc. (BGC)**: A global marketplace and financial technology services company, also with a Zacks Rank of 1 and a Value Score of B, and a long-term expected growth rate of 24.7% [12][13]. - **Qifu Technology, Inc. (QFIN)**: An AI-driven Credit-Tech platform in China, holding a Zacks Rank of 1 and a Value Score of A, with a 39.1% earnings growth rate over the last five years [14][15]. - **Universal Health Services (UHS)**: Operates various healthcare facilities, with a Zacks Rank of 1 and a Value Score of A, and a long-term expected earnings growth rate of 16.9% [16][17].