4 GARP Stocks That Investors Can Scoop Up for Maximum Returns

Growth at a reasonable price, or GARP, is an excellent strategy to earn quick investment profits. The GARP approach helps identify stocks priced below the market or any suitable target determined by a fundamental analysis.

The strategy helps investors gain exposure to stocks with impressive prospects and trading at a discount. GARP stocks have solid prospects in terms of cash flow, revenues, earnings per share (EPS) and other metrics.

A portfolio based on the GARP strategy comprises stocks that offer the best value and growth investment. Ralph Lauren RL, Royal Gold RGLD, Powell Industries POWL and American Express AXP are some promising GARP stocks.

GARP Metrics: Mix of Growth & Value Metrics

The GARP strategy offers ideal investment options, utilizing the best value and growth investing features. Investors adopting the GARP approach prefer stocks priced below the market or any reasonable target determined by fundamental analysis. The stocks have solid prospects based on cash flow, revenues, EPS, etc.

Growth Metrics

A strong earnings growth history and impressive earnings prospects are the primary concepts that GARP investors borrow from the growth investing strategy. However, instead of super-normal rates, pursuing stocks with a more stable and reasonable growth rate is a tactic of GARP investors. The GARP strategy considers growth rates between 10% and 20% ideal.

Another metric considered by growth and GARP investors is return on equity (ROE). GARP investors look for strong and higher ROE than the industry average to identify superior stocks. Moreover, stocks with a positive cash flow take precedence under the GARP plan.

Value Metrics

GARP investing prioritizes one of the popular value metrics, the price-to-earnings (P/E) ratio. The investing style picks stocks with higher P/E ratios than value investors, but it avoids companies with extremely high P/E ratios. The price-to-book value (P/B) ratio is also taken into consideration.

Using the GARP principle, we have run 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). You can see the complete list of today's Zacks #1 Rank stocks here. 

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

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

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

Here are four out of the 10 stocks that made it through the screen. Each of the four stocks carries a Zacks Rank #2.

Ralph Lauren is benefiting from investor confidence in its robust brand equity, successful execution of its strategic transformation and consistent performance across geographies and channels. RL’s strong pricing power, margin expansion, disciplined inventory and real estate management are key growth drivers for the long term.

The company is gaining from the strategic execution of its “Next Great Chapter: Accelerate Plan” and robust financial performance. The plan focuses on brand elevation, consumer centricity and operational agility. Digital transformation drives growth, with investments in personalization, mobile, omnichannel, and fulfillment enhancing consumer engagement. Retail and wholesale remain key pillars, with flagship stores, premium distribution, and partnerships boosting comparable sales across North America, Europe and Asia in the second quarter of fiscal 2026. 

The stock has returned 40.3% in the year-to-date period. It has a trailing four-quarter earnings surprise of 9.82%, on average. The Zacks Consensus Estimate for RL’s fiscal 2026 earnings has moved north by 3% to $15.41 per share over the past 30 days.

Royal Gold has been benefiting from its solid streaming agreements. The company maintains a strong balance sheet, which is likely to drive growth in the upcoming quarters. It is focused on allocating its strong cash flow to dividends, debt reduction and new businesses. Gold prices have been on an uptrend this year, aided by geopolitical reasons, a depreciating U.S. dollar, the potential for monetary policy easing and continuous purchasing by central banks. Silver has also gained on the back of the recent expansion seen in the U.S. manufacturing sector. This rise in gold and silver prices will also boost the company’s results in the coming quarters. 

Royal Gold has completed the acquisition of Sandstorm Gold Ltd., bringing the two precious metals streaming and royalty companies under a single entity. The combined entity boasts a larger, more diversified global portfolio of precious metal assets, with 40 producing assets added from Sandstorm's portfolio.

The stock has returned 39.6% in the year-to-date period. It has a trailing four-quarter earnings surprise of 3.92%, on average. The Zacks Consensus Estimate for RGLD’s 2025 earnings has moved 3.6% north to $7.96 per share over the past 30 days.

Powell engages in manufacturing and supplying custom-engineered equipment and systems that are used for distributing, controlling and monitoring the flow of electrical energy. Powell’s business momentum can be primarily attributed to its strong foothold and strength in two key markets, which are oil and gas and electric utility. A strong pipeline of projects within the LNG market and its growing presence across the data center and electric utility sectors, along with a solid backlog, are key catalysts behind the company’s growth.

Powell’s diversification efforts beyond its core oil, gas and petrochemical markets have enhanced its market share across other markets as well. It has been capitalizing on the global growth trends of electrification and digitalization. Its increased participation across the electrical power value chain has enabled it to generate solid bookings from the electric utility and commercial & other industrial markets. This has led to a strong backlog level, which was $1.4 billion (up 7% sequentially) while exiting the fiscal third quarter. 

The stock has returned 43.4% in the year-to-date period. It has a trailing four-quarter earnings surprise of 7.33%, on average. The Zacks Consensus Estimate for POWL’s fiscal 2025 earnings has remained steady at $14.39 per share over the past 30 days.

American Express is benefiting from sustained revenue growth driven by new product launches, strategic partnerships and a rebound in travel and entertainment spending. It expects revenues to rise 9-10% year over year in 2025. Strong cash generation and disciplined capital returns underscore its financial strength. It returned $2.9 billion in 3Q25 through dividends and buybacks. In the past year, its shares have outperformed the industry. AXP’s focus on increasing tech-savvy customers positions it for long-term growth. 

The acquisition of Kabbage and partnership with UPS allowed AmEx to deepen its small business offerings. Through Kabbage Funding, the company provides lines of credit between $1,000 and $150,000, while Kabbage Payments streamlines card acceptance. These tools help AmEx support merchants’ cash flow management, broadening its presence in the SMB market. AXP has formed key alliances with Delta, Hilton, Amazon and Point.me, strengthening customer loyalty and brand presence. Recent acquisitions like Tock and Rooam expand its offerings in high-end dining and venue reservations.

This stock has returned 15% in the year-to-date period. It has a trailing four-quarter earnings surprise of 4.02%, on average. The Zacks Consensus Estimate for AXP’s 2025 earnings has moved north by 0.5% to $15.37 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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