GARP is a hybrid investing strategy that combines the growth potential of high-performing companies with the price-conscious mindset of value investing. The goal: find companies that are growing - but not overpriced.
Growth at a Reasonable Price investors seek companies with strong earnings growth potential, while avoiding overhyped or overvalued stocks. Metrics like the PEG ratio (Price/Earnings to Growth) are used to evaluate whether a company’s stock is trading at a fair value given its growth.
This strategy tries to strike a balance - not too expensive like pure growth investing, but not limited to deep-value companies either. It's more selective and flexible, making it attractive to many long-term investors.
GARP is great for investors who want long-term growth, but also want to avoid chasing hype. If you want to build a portfolio of high-quality businesses with sustainable earnings - without paying sky-high prices - GARP offers a disciplined, balanced approach.
Legendary Fidelity Magellan Fund manager Peter Lynch popularized GARP. He famously looked for companies that were “too boring to be overpriced” - but had excellent long-term potential.
Want to dive deeper into the theory behind GARP investing? Check out this:
Investopedia article on GARP investing