Investors typically view growth and value as two totally distinct equity types.
But there’s a style that seeks to identify both characteristics in a single stock. Growth at a reasonable price, or GARP, was popularized by Peter Lynch, the legendary former manager of Fidelity Magellan Fund (FMAGX). During his 13 years at the fund’s helm, ending in 1990, the fund returned an annualized 29.2%, more than double the S&P 500’s performance during that period.
The key to identifying GARP stocks is to screen for stocks with higher growth rates than the broader market and lower-than-average valuations.
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In its GARP screen, Fidelity filters for criteria including:
— Quarterly and yearly earnings growth.
— Earnings growth forecasts.
— Price-to-earnings (P/E) ratio.
— Price/earnings-to-growth (PEG) ratio.
— Security price.
— 90-day average trading volume.
Here are seven stocks that Fidelity identified as among the top stocks with GARP characteristics:
| GARP Stock | Forward P/E* | PEG* |
| Carnival Corp. and PLC (CCL) | 8 | 0.6 |
| Vista Energy SAB de CV (VIST) | 5 | 0.5 |
| Qifu Technology Inc. (QFIN) | 5 | 0.4 |
| Royal Caribbean Group (RCL) | 11 | 0.9 |
| JD.com Inc. (JD) | 7 | 1.1 |
| Greenbrier Cos. Inc. (GBX) | 8 | N/A** |
| First Solar Inc. (FSLR) | 5 | 0.3 |
*Source: Finviz, as of April 11. **Price-to-book ratio, or P/B, is a favorable 0.86 as of April 11.
Carnival Corp. and PLC (CCL)
As with other travel and leisure companies, Carnival was caught in the storm of pandemic-era restrictions. However, earnings growth returned in 2021, with profit sailing higher every year since. Analysts expect earnings to grow 31% this year and 16% in 2026.
The forward P/E is 8, indicating investors may find value in this stock. Its PEG ratio is 0.6, a low number indicating that CCL may be undervalued relative to its earnings potential.
Generally speaking, a PEG below 1 can indicate an undervalued stock, though stocks with PEG ratios above 1 can still generate positive returns, but possibly from a higher price point than necessary.
One wrinkle for CCL: Carnival, along with other cruise lines, saw big stock declines as President Donald Trump announced global tariffs, which stoked fears of a recession.
Vista Energy SAB de CV (VIST)
Mexico-based oil-and-gas explorer Vista is a fairly young company, having gone public in 2019. Its three-year earnings growth rate is 90%, and its three-year revenue growth rate is 27%.
Its forward P/E ratio is 5. Wall Street expects earnings to grow 20% this year and 32% in 2026, although both estimates were recently revised lower.
Vista is a mid-cap stock, and it’s more volatile than bigger oil-and-gas names like Exxon Mobil Corp. (XOM). Its PEG ratio is a favorable 0.5.
Qifu Technology Inc. (QFIN)
Qifu is a Chinese tech platform that helps financial services companies market to consumers. Prior to the tariff announcement, the stock was trading at new highs, so its decline is not yet as sharp as other stocks.
The stock went public in 2018, and other than a slowdown in 2022, has been growing earnings every year.
Its forward P/E ratio is 5, and its PEG ratio is 0.4, an indication of the value investors get for the earnings growth potential.
Royal Caribbean Group (RCL)
Cruise line Royal Caribbean has reported solid year-over-year earnings growth since 2022, and it has some attractive characteristics, such as a forward P/E of 11.
A key to any growth stock is, of course, continuous and somewhat steady growth, says Benjamin Simerly, founder of Lakehouse Family Wealth in Cleveland. “For cruise lines, this is an almost impossible task,” he says. “Two key factors in assessing any company are the trendiness of its services or products, and the regulatory environment in which it lives.”
Investors should use caution and understand the risks around this stock, or any stock.
[Read: 7 High-Return, Low-Risk Investments for Retirees]
JD.com Inc. (JD)
This Chinese online retailer has seen earnings increase every year since 2019. Analysts expect the company to grow net income by 10% this year and 9% next year.
Even in the tariff-driven market decline, JD.com found support at its 200-day moving average, often a sign that institutional investors are stepping in to shore up existing positions.
“From a technical analysis standpoint, JD.com is looking strong based on momentum,” says Michael Laubinger, managing director at Palmetto Advisory Group in Charleston, South Carolina. Laubinger notes that the stock been outperforming the S&P 500. JD.com has a year-to-date return of 5.5% as of the April 10 market close, compared with the large-cap index’s decline of 10.4%. JD shares have gained 37.2% over the past 12 months.
Greenbrier Cos. Inc. (GBX)
This railroad equipment manufacturer exhibits volatile trading activity at times, but its shares have returned a total of 154% over the past five years. The stock’s three-year earnings growth rate is 63%, while its sales growth rate is 20%. Its forward P/E is 8.
The stock is up an annualized 9.3% over the past 15 years, versus the S&P 500’s average annual return of 12.2%. As a small cap, Greenbrier is more volatile than the large-cap index, which is normal. In recent years, the performance of big techs has driven S&P 500 gains, making it difficult for small industrials like Greenbrier to keep up.
First Solar Inc. (FSLR)
Analysts expect the manufacturer of solar gear to grow earnings 51% this year and 42% in 2026. The company has grown earnings in each of the past two years, but its share price has been on a downward trajectory since mid-2024.
Value investors may be attracted to the stock’s low PEG ratio of 0.3 and its forward P/E ratio of 5 (its current P/E is 10). But there are some potential problems that they should keep in mind.
First Solar has a market capitalization of $13 billion, putting it on the smaller side of S&P 500 components. The stock’s recent price declines have put it at a disadvantage versus the broad index; it has actually lost 1.5% over the past 15 years, underperforming the S&P 500 by a wide margin. However, its cumulative return for the past five years is 202.1%.
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7 Best GARP Stocks to Buy Now originally appeared on usnews.com
