Ahead of the U.S. presidential election, investors are quite certain about a probable increase in volatility in the equity space. Considering the diverse focus and agenda of the parties, conditional to the voting outcome, a number of sectors are bound to see growth compared to others. While a few months are still left for investors to clearly understand which sectors to put more money in and which sectors to exit, it will be a prudent idea now to follow a hybrid investment strategy to minimize the risk of this external volatility.

Here, to find an answer, we resort to the investing track of the Oracle of Omaha, where he has shown a gradual shift from being a pure-play value investor to a GARP (growth at a reasonable price) investor.

The GARP theory enables strategic mingling of growth and value-investing principles, which gives us a hybrid strategy by utilizing the best features of both. What GARPers look for is whether or not the stocks are somewhat undervalued and have solid sustainable growth potential (Investopedia).

Several stocks, which have surged significantly in the recent past, show an overwhelming success of this hybrid investing strategy over pure-play value and growth investments. Here, we will discuss the success of five such stocks. These are BRF S.A. (BRFS Quick QuoteBRFS - Free Report) , Hilton Grand Vacations (HGV Quick QuoteHGV - Free Report) , B2Gold Corp. (BTG Quick QuoteBTG - Free Report) , Kinross Gold (KGC Quick QuoteKGC - Free Report) and E2open Parent Holdings, Inc. (ETWO Quick QuoteETWO - Free Report) .

A Few More Words on GARP

GARP investing gives priority to one of the popular value metrics — the price/earnings growth (PEG) ratio. Although it is categorized under value investing, this strategy follows the principles of both growth and value investing.

The PEG ratio is defined as: (Price/ Earnings)/Earnings Growth Rate

It relates stocks’ P/E ratio with their future earnings growth rates.

While P/E alone gives an idea of stocks that are trading at a discount, PEG, while adding the growth element to it, helps identify stocks with solid future potential.

A lower PEG ratio, preferably less than 1, is always better for GARP investors.

Say for example, if a stock's P/E ratio is 10 and the expected long-term growth rate is 15%, the company's PEG will come down to 0.66, a ratio indicating both undervaluation and future growth potential.

Unfortunately, this ratio is often neglected due to investors' limitations in calculating the future earnings growth rate of a stock.

There are some drawbacks to using the PEG ratio, though. It does not consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.

Hence, PEG-based investing can be even more rewarding if some other relevant parameters are also taken into consideration.

Here are the screening criteria for a winning strategy:

PEG Ratio less than X Industry Median

P/E Ratio (using F1) less than X Industry Median (For more accurate valuation purpose)

Zacks Rank of 1 (Strong Buy) or 2 (Buy) (Whether good market conditions or bad, stocks with a Zacks Rank #1 or #2 have a proven history of success.)

Market Capitalization greater than $1 Billion (This helps us to focus on companies that have strong liquidity.)

Average 20 Day Volume greater than 50,000: A substantial trading volume ensures that the stock is easily tradable.

Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5%: Upward estimate revisions add to the optimism, suggesting further bullishness.

Value Score of less than or equal to B: Our research shows that stocks with a Value Style Score of A or B, when combined with a Zacks Rank #1, 2 or 3 (Hold), offer the best upside potential. 

Here are five out of the seven stocks that qualified the screening:

BRF: Brazil’s consumer staple stock BRF raises, produces and slaughters poultry and pork for processing, production, and sale of fresh meat, processed products, pasta, margarine, pet food, and other products. The company also provides frozen whole and cut chicken, frozen pork and turkey and halal products for Islamic markets.

BRF can be an impressive value investment pick with its Zacks Rank #1 and a Value Score of A. Apart from a discounted PEG and P/E, the stock has an impressive long-term expected growth rate of 36.7%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Hilton Grand Vacations: The company is recognized as a leading global timeshare company and is the exclusive vacation ownership partner of Hilton. With headquarters in Orlando, FL, Hilton Grand Vacations develops, markets, and operates a system of brand-name, high-quality vacation ownership resorts in select vacation destinations.

Hilton Grand Vacations stock can also be an impressive value investment pick with its Zacks Rank #1 and Value Score of B. Apart from a discounted PEG and P/E, Hilton Grand Vacations has a solid long-term historical growth rate of 8.8%.

B2Gold: Vancouver-based B2Gold is a gold producer with three operational mines (one each in Mali, Namibia and the Philippines). The company also has a portfolio of other evaluation and exploration assets in Mali, Burkina Faso, Colombia, Namibia and Finland. The company is benefiting from its ongoing strategy of maximizing profitable mine production, moving forward with its remaining development and exploration projects, and evaluating additional exploration, development and production prospects

B2Gold has an impressive growth rate of 23.5% for the next five years. The stock currently has a Value Score of A and carries a Zacks Rank #1.

Kinross Gold: This is a Canada-based global senior gold mining company with operations and projects in the United States, Brazil, Mauritania, Chile and Canada. Kinross Gold runs several mines, including Fort Knox, Round Mountain and Bald Mountain in the United States; La Coipa in Chile; Tasiast in Mauritania and Paracatu in Brazil. The company’s development projects include Manh Choh in the United States and Great Bear in Canada.

Kinross Gold stock can be an impressive value investment pick with its Zacks Rank #2 and a Value Score of B. Apart from a discounted PEG and P/E, Kinross Gold also has an impressive long-term expected growth rate of 29.7%.

E2open: It is a connected supply chain software platform that enables the world’s largest companies to transform the way they make, move, and sell goods and services. With the broadest cloud-native global platform purpose-built for modern supply chains, e2open connects more than 480,000 manufacturing, logistics, channel and distribution partners as one multi-enterprise network tracking over 16 billion transactions annually.

E2open can also be an impressive value investment pick with its Zacks Rank #2 and a Value Score of B. Apart from a discounted PEG and P/E, the stock also has a solid long-term expected growth rate of 15.1%.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

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.

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.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report