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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 of value and growth investing. Hubbel, Caterpillar, A.O. Smith and Arcos Dorados 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 5% and 20% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is return on equity (ROE). GARP investors look for a strong and higher ROE than the industry average to identify superior stocks. Moreover, 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 stocks that made it through the screen:
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 flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Hubbell has a trailing four-quarter earnings surprise of 19.9% on average. The Zacks Consensus Estimate for HUBB’s 2023 earnings has moved 10.7% north to $15.32 per share over the past 30 days.
Caterpillar is a global construction and mining equipment manufacturer. It serves infrastructure, construction, mining, oil & gas and transportation sectors. It has more than 4 million products with an extensive dealer network of 165 dealers, spanning 191 countries. The company currently sports a Zacks Rank #1.
Caterpillar has a trailing four-quarter earnings surprise of 18.5% on average. The Zacks Consensus Estimate for CAT’s 2023 earnings has moved 8.4% north to $19.45 per share over the past 30 days.
A.O. Smith is one of the leading manufacturers of commercial and residential water heating equipment and water treatment products worldwide. The company carries a Zacks Rank #2.
A.O. Smith has a trailing four-quarter earnings surprise of 10.5% on average. The Zacks Consensus Estimate for AOS 2023 earnings has moved 2% north to $3.57 per share over the past 30 days.
Arcos Dorados is the world’s largest independent McDonald’s franchisee. Its operations span Brazil, North Latin America, South Latin America and the Caribbean. It also runs quick-service restaurants in Latin America and the Caribbean. The company currently carries a Zacks Rank #2.
Arcos Dorados has a trailing four-quarter earnings surprise of 34.9% on average. The Zacks Consensus Estimate for ARCO’s 2023 earnings has moved 8.3% north to 78 cents per share over the past 30 days.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
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 that are 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 that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights Hubbel, Caterpillar, A.O. Smith and Arcos Dorados
For Immediate Release
Chicago, IL – August 23, 2023 – Stocks in this week’s article are Hubbel (HUBB - Free Report) , Caterpillar (CAT - Free Report) , A.O. Smith (AOS - Free Report) and Arcos Dorados (ARCO - Free Report) .
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 of value and growth investing. Hubbel, Caterpillar, A.O. Smith and Arcos Dorados 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 5% and 20% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is return on equity (ROE). GARP investors look for a strong and higher ROE than the industry average to identify superior stocks. Moreover, 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 stocks that made it through the screen:
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 flaunts a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
Hubbell has a trailing four-quarter earnings surprise of 19.9% on average. The Zacks Consensus Estimate for HUBB’s 2023 earnings has moved 10.7% north to $15.32 per share over the past 30 days.
Caterpillar is a global construction and mining equipment manufacturer. It serves infrastructure, construction, mining, oil & gas and transportation sectors. It has more than 4 million products with an extensive dealer network of 165 dealers, spanning 191 countries. The company currently sports a Zacks Rank #1.
Caterpillar has a trailing four-quarter earnings surprise of 18.5% on average. The Zacks Consensus Estimate for CAT’s 2023 earnings has moved 8.4% north to $19.45 per share over the past 30 days.
A.O. Smith is one of the leading manufacturers of commercial and residential water heating equipment and water treatment products worldwide. The company carries a Zacks Rank #2.
A.O. Smith has a trailing four-quarter earnings surprise of 10.5% on average. The Zacks Consensus Estimate for AOS 2023 earnings has moved 2% north to $3.57 per share over the past 30 days.
Arcos Dorados is the world’s largest independent McDonald’s franchisee. Its operations span Brazil, North Latin America, South Latin America and the Caribbean. It also runs quick-service restaurants in Latin America and the Caribbean. The company currently carries a Zacks Rank #2.
Arcos Dorados has a trailing four-quarter earnings surprise of 34.9% on average. The Zacks Consensus Estimate for ARCO’s 2023 earnings has moved 8.3% north to 78 cents per share over the past 30 days.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2139119/scoop-up-these-4-garp-stocks-to-receive-handsome-returns
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 that are 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 that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.