For Immediate Release
Chicago, IL – November 25, 2022 – Stocks featured in this week’s article are RPM International RPM, WW Grainger GWW, Grand Canyon Education LOPE, and Texas Roadhouse TXRH.
4 GARP shares to collect for maximum returns
Growth at a Reasonable Price, or GARP, is an excellent strategy for making quick returns on investments. The GARP approach helps identify stocks that are priced below the market or a reasonable target determined by fundamental analysis.
The strategy helps investors gain exposure to stocks that have impressive prospects and are trading at a discount. GARP stocks have a solid outlook in terms of cash flow, revenue, earnings per share (EPS), and others.
Therefore, a portfolio created based on the GARP strategy will contain stocks that offer the best value and growth investment. RPM International, WW Gringer, Grand Canyon Formation and Texas Roadhouse are some GARP stocks that are showing promise.
GARP Metrics — Mixture of growth and value metrics
The GARP strategy aims to offer an ideal investment by utilizing the best characteristics of both value and growth investing. Investors using the GARP approach will prefer to buy stocks that are priced below the market or a reasonable target determined by fundamental analysis. The stocks have a solid outlook in terms of cash flow, revenue, EPS and others.
A strong earnings growth history and impressive earnings prospects are the key concepts that GARP investors adopt from growth investing strategy. Instead of above-normal growth rates, however, one tactic used by GARP investors is to pursue stocks with a more stable and reasonable growth rate. Growth rates between 5% and 20% are therefore considered ideal within the framework of the GARP strategy.
Another growth metric considered by both growth and GARP investors is return on equity (ROE). GARP investors look for a strong and higher ROE than the industry average to identify superior stocks. In addition, cash flow positive stocks are prioritized under the GARP plan.
GARP investing prioritizes one of the most popular value metrics – the price-to-earnings (P/E) ratio. Although the investment style selects stocks with higher P/E ratios as value investors, it avoids companies with extremely high P/E ratios. The price to book ratio (P/B) is also taken into account.
Using the GARP principle, we conducted a screen to identify stocks that should offer solid returns in the short term.
Here are four stocks that made it through the screen:
RPM International manufactures and markets high-performance coatings, sealants, and specialty chemicals primarily for maintenance and enhancement applications. RPM currently has a Zacks Rank #1. You can see the full list of today’s Zacks #1 Rank stocks can be found here.
RPM has a trailing four-quarter earnings surprise averaging 7.34%. The Zacks Consensus estimate for RPM’s fiscal 2023 earnings is up 2.4% over the past 30 days to $4.60 per share.
WW Gringer is a diversified business-to-business distributor of maintenance, repair and operations products and services primarily operating in North America, Japan and the United Kingdom. The company currently holds a #2 Zacks rank.
WW Grainger has a trailing four-quarter earnings surprise averaging 10.1%. The Zacks Consensus estimate for WW Grainger’s 2022 earnings is up 4.1% over the past 30 days to $29.31 per share.
Grand Canyon Formation is an accredited provider of online post-secondary education services focused on offering graduate and undergraduate programs in its core disciplines of education, business and healthcare. The company currently holds a #2 Zacks rank.
Grand Canyon Education has a trailing four-quarter earnings surprise averaging 4.79%. The Zacks Consensus estimate for LOPE’s 2022 earnings is up 3.9% over the past 30 days to $5.85 per share.
Texas Roadhouse is a full-service casual restaurant chain offering a selection of specially seasoned and aged steaks on-site and cooked to order over open grills. The company currently holds a #2 Zacks rank.
Texas Roadhouse has a trailing four-quarter earnings surprise averaging 11.24%. The Zacks Consensus estimate for 2022 earnings is up 4.6% over the past 30 days to $4.07 per share.
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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 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 mentioned in this material.
About the screen of the week
Zacks.com created the web’s first and best screening system, which was named the #1 Site for Screening Stocks by Money Magazine. But powerful screening tools are just the beginning. That’s why Zacks created the Screen of the Week to highlight profitable stock-picking strategies that investors can actively use.
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Texas Roadhouse, Inc. (TXRH): Free Stock Research Report
WW Grainger, Inc. (GWW): Free Stock Research Report
Grand Canyon Education, Inc. (LOPE): Free Stock Research Report
RPM International Inc. (RPM): Free Stock Research Report
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