GARP Investing: How to Find Growth Stocks Without Overpaying
When you hear "growth stock," you might think of companies racing ahead with sky-high prices and no earnings to back them up. But GARP investing, a strategy that balances growth and value by targeting stocks with solid earnings growth at reasonable prices. Also known as Growth At a Reasonable Price, it’s how smart investors avoid overpaying for hype while still riding real growth. It’s not about chasing the hottest tech name or the latest AI trend—it’s about finding companies that are growing steadily, making money, and still trading at fair valuations.
GARP investing sits right between two extremes: pure value investing, where you buy cheap stocks even if they’re stagnant, and pure growth investing, where you pay anything for high potential. The key tool here is the PEG ratio, a metric that compares a stock’s P/E ratio to its earnings growth rate. A PEG under 1.0 often signals a stock is undervalued for its growth. That’s why Peter Lynch, one of the most successful investors ever, used this approach to find tenbaggers—not by luck, but by looking at real earnings growth and asking: "Is this price justified?" The P/E ratio, the basic price-to-earnings measure that tells you how much you’re paying for each dollar of earnings gives you the starting point, but alone, it’s misleading. A stock with a 30 P/E might look expensive—until you learn it’s growing earnings at 35% a year. That’s where GARP shines.
This strategy doesn’t require fancy math or insider access. You just need to ask three simple questions: Is the company growing its profits? Is that growth sustainable? And is the price reflecting that growth, or is it way ahead of itself? The posts in this collection show you exactly how to do this—whether you’re comparing P/E and PEG ratios, evaluating real-world examples like Lynch’s picks, or learning how to spot hidden gems in everyday businesses. You’ll also see how this approach fits with broader investing habits, like building an emergency fund before you invest, managing taxes on dividends, or using ETFs to diversify without overcomplicating things. No fluff. No jargon. Just clear, practical ways to invest smarter—not harder.
