Add These 4 GARP Stocks to Your Portfolio 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. GE Aerospace GE, ResMed RMD, Vertiv VRT and National Fuel Gas Company NFG 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 10% 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. Stocks with positive cash flows find precedence under the GARP plan.

Value Metrics

GARP investing prioritizes 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.

Screening Parameters

Along with the criteria discussed in the above section, we have considered a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Last 5-year EPS & projected 3-5-year EPS growth rates between 10% and 25% (Strong EPS growth history and prospects ensure improving business.)

ROE (over the past 12 months) greater than the industry average (Higher ROE than the industry average indicates superior stocks.)

P/E and P/B ratios less than the M-industry average (P/E and P/B ratios less than that of the industry indicate that the stocks are undervalued.)

Here are four stocks from the 11 that made it through the screening process. Each of our picks carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

GE Aerospace has been witnessing strength in its businesses, driven by robust demand for commercial engines, propulsion and additive technologies. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel augur well for the company. Its portfolio-reshaping actions are likely to unlock value for its shareholders. For 2025, GE Aerospace expects organic revenues to grow in the low-double-digit range from the year-ago level.

This stock has surged 80.5% in the year-to-date period. It has a trailing four-quarter earnings surprise of 16.07%, on average. The Zacks Consensus Estimate for GE’s 2025 earnings has remained steady at $5.87 per share over the past 30 days.

ResMed’s continued product development is driving growth within this business globally. The company’s AirFit F40 is performing extremely well in the U.S. market. It also features AirTouch N30i, the world’s first unique fabric-based patient interface, which was launched in select markets. Early feedback for AirTouch N30i was positive. ResMed’s increased device sales continue to drive overall revenue growth, reflecting the ongoing combined availability of AirSense 10 and AirSense 11 sleep devices to support strong underlying global demand. In the fourth quarter of fiscal 2025, the company successfully maintained its market leadership, banking on its two AirSense platforms.

This stock has returned 20% in the year-to-date period. It has a trailing four-quarter earnings surprise of 4.53%, on average. The Zacks Consensus Estimate for RMD’s fiscal 2026 earnings has moved south by 0.65 to $10.8 per share over the past 60 days.

Vertiv is benefiting from its robust and diversified portfolio, which is driving strong revenue growth. The company’s comprehensive offerings, which include critical infrastructure solutions for data centers, such as power, cooling, and prefabrication technologies, are well-aligned with the growing demand for digital transformation and AI infrastructure. Further expanding its portfolio, Vertiv announced the global launch of Vertiv OneCore in August, a scalable, prefabricated data center solution. It integrates power, thermal and IT infrastructure into a single, factory-assembled system, accelerating high-density deployments and reducing on-site complexity. The company acquired Belgium-based Waylay NV in August to strengthen its AI-driven monitoring, automation, and control capabilities for power and cooling systems in data centers.

This stock has surged 33.8% in the year-to-date period. It has a trailing four-quarter earnings surprise of 10.65%, on average. The Zacks Consensus Estimate for VRT’s 2025 earnings has remained steady at $10.82 per share over the past 30 days.

National Fuel Gas' systematic investments should strengthen its operations and reduce greenhouse gas emissions. Strong liquidity should allow it to meet debt obligations. The company's steady process of replacing and modernizing the existing pipelines should further boost earnings. It also acquired Shell’s assets, which should further boost its top-line performance. Shares of the company have outperformed the industry in the past three months. However, it has to comply with the stringent regulations associated with exploration and production activities and incur additional expenses to meet the regulations. National Fuel Gas' dependence on the performance of its subsidiaries to meet financial obligations is a headwind. New charges result in high operating expenses, which may lower its future earnings.

This stock has surged 44.1% in the year-to-date period. It has a trailing four-quarter earnings surprise of 4.37%, on average. The Zacks Consensus Estimate for NFG’s fiscal 2025 earnings has remained steady at $6.84 per share over the past 30 days.

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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.

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