Chicago, IL – April 21, 2022 – Stocks in this week’s article are East West Bancorp EWBC, SEI Investments Co. SEIC, Automatic Data Processing ADP and CDW Corp. CDW.
Add These 4 GARP Stocks to Your Portfolio for Maximum Returns
If you're looking for a profitable portfolio of stocks that will offer the best of value and growth investing, try the growth at a reasonable price or GARP strategy.
It helps an investor gain exposure to stocks that are undervalued and have impressive growth prospects. Unlike a blend strategy, a portfolio that uses GARP investing is expected to include stocks that offer the best of both value and growth investing.
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 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 terms of cash flow, revenues, earnings per share (EPS) and so on.
Growth Metrics
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 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 the 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.
Value Metrics
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 compared to value investors, it avoids companies with extremely high P/E ratios. Moreover, the price-to-book value (P/B) ratio is also considered.
Using the GARP principle, we have run a screen to identify stocks that should offer solid returns in the near term.
Here are four 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. You can see the complete list of today's Zacks #1 Rank stocks here.
East West Bancorp has a trailing four-quarter earnings surprise of 8.39%, on average. The Zacks Consensus Estimate for EWBC's 2022 earnings has moved north by 4.9% to $6.81 per share over the past 30 days.
SEI Investments Co. is an asset management company offering wealth management business solutions that include investment processing, management and operations solutions. The company carries a Zacks Rank #2.
SEI Investments has a trailing four-quarter earnings surprise of 1.54%, on average. The Zacks Consensus Estimate for 2022 earnings has moved north by 9.6% to $4.23 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 earnings has been stable at $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 earnings has been stable at $9.30 per share over the past 30 days.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1903146/add-these-4-garp-stocks-to-your-portfolio-for-maximum-returns
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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