GARP+Investing

Will and Connor Improved by: Adele and Shradha

**What Is GARP?**

 * GARP is an abbreviation for Growth At Reasonable Price
 * GARP refers to the investment strategy which combines the concept of both growth investing and value investing to find individual stocks.
 * A typical GARP investor looks for companies that are showing consistent earnings growth above the current broad market levels while ignoring companies that have high valuations.
 * This method eliminates the possibility of over-relying on either growth or value investing.
 * Peter Lynch one of the main supporters of the GARP method highly praises this method due to its high returns.
 * GARP investors are like growth investors since they look at companies with positive earnings and projected positive earnings. However, they do not like companies with extremely high growth estimations within the 25-30% range.
 * Like growth investors, they look for low P/E ratios.
 * GARP investors are like value investors in the sense that they like companies with low price-to-book (P/B) ratios.


 *  PEG Ratio **




 * GARP investors generally use the PEG ratio to determine the value of an investment.
 * The PEG ratio should be less than 1 and close to 0.5
 * A PEG of less than 1 implies that the stock's price is lower than it should be, given its current earnings

Conclusion


 * GARP might sound like the perfect strategy but combining growth and investing isn't as easy as it seems.
 * An individual must master both strategies otherwise one might end up buying mediocre stocks.

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Presentation:

Questions:

1. What two methods do GARP investors use to invest in stocks? 2. Describe the process that a GARP investor goes through. 3. How does the PEG ratio affect a GARP investor's decision?

Sources http://www.investorguide.com/article/11805/understanding-garp-stock-investing-strategy/ http://www.investopedia.com/university/stockpicking/stockpicking5.asp