Growth at a reasonable price, or GARP, is an investing strategy that blends value and growth investing. Instead of just buying a stock that’s cheap, or one that’s growing earnings fast, we look for stocks that appear decently priced with respect to year-over-year growth. For example, a company growing 15% annually with a price-to-earnings (P/E) ratio of 15 or less would be considered cheap by GARP standards. Since the “E” is growing at 15% per year, the P/E next year will either decline towards 13, or the stock price will rise in tandem with earnings.
It sounds like a foolproof investing formula. Problem is, everyone knows it is. Which is why there are exactly ZERO stocks in the universe that have a P/E below 15, and earnings growth above 15%, according to YCharts. Sorry… Sold Out of GARP. 2 Dividend Growth Stocks To Buy & Hold: Boeing (BA) and Edison International (EIX).
Source: InvestorPlace
Related Articles:
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- Three Keys For Successful Dividend Growth Investing
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