Chicago, IL – October 3, 2024 – Stocks in this week’s article are Ferrari RACE, Vertex VERX, ResMed RMD and Hubbel HUBB.
Scoop Up These 4 GARP Stocks to Receive Handsome Returns
If you are looking for a profitable portfolio of stocks offering the best of value and growth investing, try the growth at a reasonable price or GARP strategy.
The strategy helps investors gain exposure to undervalued stocks with impressive prospects. Unlike a blend strategy, a portfolio that uses GARP investing is expected to include stocks that offer the best value and growth investing. Ferrari, Vertex, ResMed and Hubbel are some GARP stocks that hold promise.
GARP Metrics — Mix of Growth & Value Metrics
The GARP strategy seeks to offer an ideal investment by utilizing the best features of value and growth investing. Investors adopting the GARP approach prefer buying stocks 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
A 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, pursuing stocks with a more stable and reasonable growth rate is a tactic of GARP investors. Hence, growth rates between 10% and 20% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is the return on equity (ROE). GARP investors look for a strong and higher ROE than the industry average to identify superior stocks. Stocks with positive cash flows find precedence under the GARP plan.
Value Metrics
GARP investing prioritizes the popular value metrics — the price-to-earnings (P/E) and price-to-book (P/B) ratios. Though this investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios.
Using the GARP principle, we ran a screen to identify stocks that should offer solid returns in the near term.
Here are four of the nine stocks that made it through the screening process:
Ferrari is a leading designer, manufacturer and seller of sports cars. Its products include sports car models like 458 Italia, 488 GTB, 488 Spider, F12 Berlinetta, 458 Speciale and grand tourer cars. RACE currently sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Ferrari has gained 34.7% year to date. It delivered a trailing four-quarter earnings surprise of 12.3%, on average. The Zacks Consensus Estimate for RACE’s fiscal 2024 earnings has moved 5.4% north to $8.81 per share over the past 60 days.
Vertex provides tax technology solutions like tax determination, compliance and reporting, tax data management, document management, pre-built integration, and industry-specific solutions in retail, leasing, communication and manufacturing industries principally across the United States and the international market. The company sports a Zacks Rank #1 at present.
Vertex has gained 45.6% in the year-to-date period. It has a trailing four-quarter earnings surprise of 18.5%, on average. The Zacks Consensus Estimate for VERX’s 2024 earnings has moved 9.4% north to 58 cents per share over the past 60 days.
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 carries a Zacks Rank #2.
ResMed has gained 38.8% on a year-to-date basis. It has a trailing four-quarter earnings surprise of 4.5%, on average. The Zacks Consensus Estimate for RMD’s fiscal 2025 earnings has moved 2.9% north to $9.02 per share over the past 60 days.
Hubbell designs and manufactures electrical and electronic products, such as plugs, receptacles, connectors, data signal processing components, lighting fixtures, and high-voltage test and measurement equipment. The company currently carries a Zacks Rank #2.
Hubbel has gained 29.9% in the year-to-date period. It has a trailing four-quarter earnings surprise of 1.21% on average. The Zacks Consensus Estimate for HUBB’s 2024 earnings has moved 0.5% north to $16.45 per share over the past 60 days.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2344866/scoop-up-these-4-garp-stocks-to-receive-handsome-returns
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