The Growth at a Reasonable Price (GARP) investment strategy focuses on identifying stocks with strong growth potential while ensuring they are not overvalued. This approach serves two primary purposes: first, it mitigates the risks associated with growth investing by filtering out overvalued companies that are more vulnerable to sharp declines during unfavourable market conditions or disappointing earnings reports. Second, it helps investors avoid “value traps” by steering clear of stocks that appear inexpensive but are fundamentally weak. By blending elements of both growth and value investing, GARP aims to deliver the best of both worlds.
Defining GARP Investing
Leading financial institutions have their own perspectives on GARP investing. According to Fidelity Investments, the GARP strategy seeks to identify stocks with strong growth potential while remaining reasonably priced based on key valuation metrics. It balances the pursuit of high-growth opportunities with disciplined valuation, ensuring that investors avoid both overpriced growth stocks and undervalued companies with weak fundamentals. GARP investors typically target companies with above-market median growth rates—both historical and projected—while keeping valuation measures such as price-to-earnings (P/E) and price/earnings-to-growth (PEG) ratios below the market median.
A February 21 insights report from investment management company T. Rowe Price’s portfolio managers further underscored the appeal of GARP investing. They emphasized that GARP stocks stand out in a market where attractive investment opportunities are often limited. Market supply and demand imbalances create consistent opportunities to acquire GARP stocks at a discount. By carefully assessing risk-adjusted compensation across asset classes, investors can strategically allocate capital to achieve superior risk-adjusted returns.
The report also highlighted key advantages of GARP stocks:
“Our analysis demonstrates that these stocks have not only generated better absolute returns, but they have also tended to trade at a discount and grow earnings faster than the broader equity market. They have also outperformed the S&P 500 Index across a wide range of market environments. Given the discount we have observed for these stocks, and their demonstrably higher ROE, it follows that these stocks would tend to perform better than the broader market over longer time periods. What makes them even more attractive to us, as portfolio managers, is that GARP stocks have generated not only better absolute returns, but better risk‑adjusted returns (as measured by the Sharpe ratio from 1990–2024).”
With these insights in mind, let’s explore our selection of the 10 best GARP stocks to buy now.
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Our Methodology
Our methodology for identifying GARP stocks combined valuation, growth, and fundamental strength. We focused on companies with a market capitalization of at least $2 billion and shortlisted those with positive earnings growth over the past five years and an expected EPS growth of over 15% for the current year. Regarding next financial year (FY), for firms with more than six months remaining in their fiscal year, we used FY 2025 earnings estimates, while for those with six months or less left, we relied on FY 2026 estimates. To ensure reasonable valuation, we selected stocks with a forward price-to-earnings (P/E) ratio between 15 and 25 and a P/E-to-growth (PEG) ratio below 2. Additionally, we included only companies with a long-term debt-to-equity ratio below 1.0. Stocks that met these criteria were further filtered for a potential upside of at least 20%. Finally, from this refined list, we ranked the top 10 stocks in ascending order based on hedge fund ownership, using Q4 2024 data.
Note: All pricing data is as of market close on March 7.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best GARP Stocks to Buy Now
10. Archrock Inc. (NYSE:AROC)
Fwd. P/E: 15
Expected EPS Growth Next FY: 38%
Number of Hedge Fund Holders: 23
Upside Potential: 35%
Archrock Inc. (NYSE:AROC) is an energy infrastructure company that specializes in natural gas compression, mainly for the midstream sector. It is the largest provider of compression services for oil and gas companies in the U.S. The company also offers maintenance and support services for customers who own their own compression equipment.
The company’s natural gas compressors are used to maintain or increase the pressure of natural gas as it moves through pipelines, production facilities, and processing plants. These services are critical for ensuring efficient transportation, storage, and processing of natural gas.
For the fourth quarter of 2024, Archrock Inc. (NYSE:AROC) continued to report strong growth as topline rose 26% year-over-year to $326 million. Adjusted net income increase was even more impressive at 86% to $61.5 million. The company anticipates strong market opportunities due to increasing energy demand, particularly for natural gas needed for LNG exports and power generation. With high utilization levels and a significant backlog for 2025, the company is already booking units for 2026 delivery and expects continued strong demand for new equipment into the next year.
Archrock Inc. (NYSE:AROC) sports a consensus Buy rating with 1-year median consensus price target of $32, indicating over 35% upside. On February 3, a Mizuho analyst raised the price target for the shares to $34 from $29, maintaining an Outperform rating. The analyst’s optimistic outlook on Archrock Inc. (NYSE:AROC) had improved over the past three months due to strong performance from U.S. compression operators, suggesting better than expected near-term growth. The analyst sees the company as uniquely positioned to pursue growth while maintaining financial flexibility.
9. Boot Barn Holdings Inc. (NYSE:BOOT)
Fwd. P/E: 16
Expected EPS Growth Next FY: 16%
Number of Hedge Fund Holders: 29
Upside Potential: 75%
Boot Barn Holdings Inc. (NYSE:BOOT) operates a retail chain specializing in western and work-related footwear, apparel, and accessories across the U.S. In addition to its 438 stores spanning 46 states, the company sells its products through its e-commerce websites, third-party marketplaces, and the Boot Barn app.
Shares of Boot Barn Holdings Inc. (NYSE:BOOT) have declined 38% since the company reported its Q3 2025 results, despite exceeding expectations. Net sales grew approximately 17% year-over-year to $608 million, driven by strong same-store sales growth of 9%. Retail same-store sales increased by 8.2%, while e-commerce same-store sales rose by over 11%. With improved operating leverage, net income surged 35% year-over-year. The company also continued its expansion, opening 13 new stores during the quarter, bringing its total store count to 438.
Following the earnings report, BofA analyst Christopher Nardone viewed the stock’s recent pullback as an attractive buying opportunity, highlighting Boot Barn Holdings Inc. (NYSE:BOOT) as one of the most compelling growth stories in retail. He attributed the decline to multiple compression driven by tariff concerns and their impact on both margins and consumer sentiment. However, his bullish outlook was based on confidence in the company’s new store pipeline, an expanding customer base in a market with limited competition, and potential operating margin expansion despite tariff headwinds. The analyst reiterated his Buy rating with an unchanged $195 price target, implying around 80% upside potential.
