For Immediate Release
Chicago, IL – February 16, 2022 – Stocks in this week’s article are East West Bancorp EWBC, Automatic Data Processing ADP, CDW Corp. CDW, and W.W. Grainger GWW.
4 GARP Stocks for a Winning Portfolio
Investors on the lookout for stocks with the potential for maximum growth and value investing may consider the growth at a reasonable price or GARP strategy.
This popular strategy helps investors gain exposure to stocks with impressive growth prospects that are trading at a discount. GARP investing employs popular value metrics — price-to-earnings (P/E) and price-to-book value (P/B) ratio — to evaluate whether a stock is undervalued.
GARP Metrics – Mix of Growth & Value Metrics
The GARP strategy seeks to offer an ideal investment by utilizing the best features of both value and growth investing. Investors adopting the GARP approach will prefer to buy stocks that are priced below the market or any reasonable target determined by fundamental analysis. These stocks also have solid prospects in cash flow, revenues, earnings per share (EPS) and so on.
Both 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 also a tactic of GARP investors. Hence, growth rates between 10% and 20% are considered ideal under the GARP strategy.
Another growth metric that is considered by both growth and GARP investors is return on equity (ROE). GARP investors look for strong and higher ROE compared to the industry average to identify superior stocks. Moreover, stocks with positive cash flow find precedence under the GARP plan.
GARP investing gives priority to one of the popular value metrics – the price-to-earnings (P/E) ratio. Though this investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios. Moreover, the price-to-book value (P/B) ratio is also considered.
iHere are four of the six stocks that made it through the screen:
East West Bancorp serves as a financial bridge between the United States and Greater China by providing various personal and commercial banking services to small and medium-sized businesses, business executives, professionals, and other individuals. The company currently sports a Zacks Rank #1.
East West Bancorp has a trailing four-quarter earnings surprise of 8.39%, on average. The Zacks Consensus Estimate for EWBC’s 2022 has moved north by 6.6% to $6.49 per share over the past 30 days.
Automatic Data Processing is a provider of cloud-based Human Capital Management technology solutions including payroll, talent management, Human Resources and benefits administration, and time and attendance management. The company carries a Zacks Rank #2.
Automatic Data Processing has a trailing four-quarter earnings surprise of 5.5%, on average. The Zacks Consensus Estimate for ADP’s fiscal 2022 has moved north by 0.7% to $6.82 per share over the past 30 days.
CDW Corp. is a leading provider of integrated information technology (IT) solutions to small, medium and large business, government, education and healthcare customers. The company carries a Zacks Rank #2 currently.
CDW has a trailing four-quarter earnings surprise of 9.8%, on average. The Zacks Consensus Estimate for 2022 has moved north by 6.2% to $9.27 per share over the past 60 days.
W.W. Grainger is a broad line, business-to-business distributor of maintenance, repair and operating products and services which operates primarily in North America, Japan and the U.K. The company carries a Zacks Rank #2 currently.
W.W. Grainger has a trailing four-quarter earnings surprise of 1.65%, on average. The Zacks Consensus Estimate for W.W. Grainger’s 2022 has moved north by 4.4% to $24.61 per share over the past 60 days.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1867917/4-garp-stocks-for-a-winning-portfolio
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.
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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report
CDW Corporation (CDW) : Free Stock Analysis Report
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