Definition
GARP combines elements of value and growth investing by seeking companies with above-average growth at reasonable valuations. Popularized by Peter Lynch, GARP investors use metrics like PEG ratio to find growth without overpaying. It aims to avoid both value traps and overpriced momentum stocks.
Formula
Typically uses PEG < 1 or P/E < Growth Rate as screens
Example
A GARP investor might buy a stock growing earnings at 20% annually with a P/E of 15 (PEG = 0.75) rather than a stock growing 30% with P/E of 50 (PEG = 1.67).
FAQ
What is GARP (Growth at a Reasonable Price)?
An investment strategy seeking growth stocks that aren't overvalued.
How do you calculate GARP (Growth at a Reasonable Price)?
A common formula for GARP (Growth at a Reasonable Price) is: Typically uses PEG < 1 or P/E < Growth Rate as screens
Why is GARP (Growth at a Reasonable Price) important?
GARP (Growth at a Reasonable Price) helps investors evaluate valuation and make more informed decisions.