Scoop Up These 3 GARP Stocks 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 value and growth investing. ResMed RMD, OUTFRONT Media OUT and Cintas Corporation CTAS are some GARP stocks that hold promise.GARP Metrics — Mix of Growth & Value MetricsThe 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 MetricsA 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 the 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 MetricsGARP 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 ParametersAlong 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 20% (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 three of the four stocks that made it through the screening process:ResMed holds a major position as a designer, manufacturer, as well as a distributor in the worldwide market for generators, masks and related accessories for the treatment of sleep-disordered breathing and other respiratory disorders. This Zacks Rank #2 company benefits from its robust Mask business, where resupply programs are powered by a digital health ecosystem. The company continues to see strength in the global supply of its cloud-connected platforms, such as AirSense10 and AirSense11. The strong uptake of the myAir app is likely to drive higher adherence to therapy in patients. The company’s continuous efforts to invest and expand in the global market look encouraging. We expect its revenues to witness a CAGR of 6.3% during fiscal 2025-2027. You can see the complete list of today's Zacks #1 Rank stocks here. ResMed has gained 40.3% in the year-to-date period. It has a trailing four-quarter earnings surprise of 6.41%, on average. The Zacks Consensus Estimate for RMD’s fiscal 2025 earnings has moved north by 1.3% to $9.34 per share over the past 30 days.OUTFRONT Media is a leading provider of out-of-home (“OOH”) advertisement space in key markets throughout the United States. With billboard and transit displays, the company provides advertising structures and sites to diverse industries across the largest markets in the United States.The REIT enjoys a diversified portfolio of advertising sites, geography and industry-wise, in some of the key markets of the United States. Its efforts to expand the OOH advertising platform bode well for long-term growth. Strategic investments in the digital billboard portfolio and ongoing efforts to convert its business from traditional static billboard advertising to digital displays support its digital revenue growth. We estimate 2024 total revenues to increase 1.2% year over year. OUTFRONT Media has gained 35.7% in the year-to-date period. It has a trailing four-quarter earnings surprise of 3.83%, on average. The Zacks Consensus Estimate for OUT’s 2024 earnings has moved north by 1.8% to $1.73 per share over the past 30 days.Cintas provides specialized services to businesses of all types throughout North America. It also operates in Europe, Asia and Latin America. The company designs, manufactures and implements corporate identity uniform programs and provides entrance mats, restroom supplies, promotional products and first aid and safety products for diversified businesses.Cintas has been experiencing strength in its Uniform Rental and Facility Services segment, driven by growth in its customer base and the introduction of additional products and services to existing customers. Cintas’ focus on strengthening its product portfolio, along with investments in technology and existing facilities, should continue to drive its performance. Also, its focus on operational executions and pricing actions helps it maintain a healthy margin. The company remains focused on acquiring businesses to gain access to new customers and product lines. CTAS’ acquisition of Paris Uniform Services (in March 2024) boosted its presence in Pennsylvania, New York, Maryland and West Virginia. Also, the buyout of SITEX (in February 2024) has strengthened its market position in the central Midwest region.Cintas has gained 48.5% in the year-to-date period. It has a trailing four-quarter earnings surprise of 6.65%, on average. The Zacks Consensus Estimate for CTAS’ fiscal 2025 earnings has remained steady at $4.23 per share over the past 30 days.Get the remaining stock on the list and start testing this and other ideas. It can all be done with the Research Wizard stock picking and back-testing software.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 of 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.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. 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(OUT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks