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.
8. Western Alliance Bancorp. (NYSE:WAL)
Fwd. P/E: 9; P/B: 1.33
Expected EPS Growth Next FY: 27%
Number of Hedge Fund Holders: 32
Upside Potential: 36%
Western Alliance Bancorp. (NYSE:WAL) is a financial holding company offering a broad range of banking services. Through its wholly-owned subsidiary, Western Alliance Bank, the company provides customized lending solutions, deposit services, and treasury management, including digital payment and funds transfer capabilities. Additionally, it delivers specialized financial services to business clients and operates non-bank subsidiaries that offer captive insurance, corporate trust services, and leveraged loan administration solutions.
On January 27, Western Alliance Bancorp. (NYSE:WAL) reported a Q4 2024 net income of $217 million, reflecting an 8.6% increase from the previous quarter, while full-year net income for 2024 reached $788 million, marking a 9.0% year-over-year growth. Pre-provision net revenue (PPNR) for the quarter climbed 12% sequentially to exceed $319 million, and tangible common equity remained strong at 14.6%. Despite a seasonal $1.7 billion decline in deposits, asset quality remained solid throughout the year, with a non-performing assets ratio of 0.65% and net charge-offs at 0.18% of average loans. Overall, the company’s financial performance in both Q4 and FY 2024 showcased robust earnings growth and resilient asset quality.
In a report on February 3, a Piper Sandler analyst reiterated an Overweight rating on Western Alliance Bancorp. (NYSE:WAL) and raised the price target from $115 to $116. The analyst expects profitability to strengthen, driven by ongoing PPNR growth, lower ECR deposit costs benefiting from rate-related relief, and a potential increase in mortgage banking revenue, which he believes is not accounted for in the company’s FY25 guidance.
7. Modine Manufacturing Company (NYSE:MOD)
Fwd. P/E: 21
Expected EPS Growth Next FY: 22%
Number of Hedge Fund Holders: 43
Upside Potential: 86%
Modine Manufacturing Company (NYSE:MOD) manufactures and sells innovative and environmentally responsible thermal management products and solutions to a wide range of customers in commercial, industrial, and HVAC&R markets. They are also a leading provider of engineered heat transfer systems and high-quality components for on- and off-highway OEM vehicular applications.
Modine Manufacturing Company (NYSE:MOD) recently secured a $180 million order for its Airedale by Modine data center cooling systems from a major AI infrastructure developer, with deliveries planned through 2025 and early 2026. This milestone highlights the company’s growing presence in the hyperscale data center market and reinforces its reputation for delivering cost-efficient, high-performance cooling solutions. The strong growth in the company’s data center revenue in the third quarter of 2024 further underscores its momentum in this space.
Analyst Brian Drab of William Blair remains bullish on Modine Manufacturing Company (NYSE:MOD), maintaining a Buy rating due to its strong growth outlook. He expects the aforementioned order to drive over 30% organic growth in the company’s data center revenue for fiscal 2026, exceeding previous projections. Despite broader concerns over data center capital expenditures, the sustained demand for Modine’s high-efficiency Airedale cooling systems signals confidence in its offerings. The analyst also views the recent dip in the company’s share price as a compelling buying opportunity, reaffirming his Outperform rating on the stock.
6. Onto Innovation Inc. (NYSE:ONTO)
Fwd. P/E: 21
Expected EPS Growth Next FY: 21%
Number of Hedge Fund Holders: 50
Upside Potential: 86%
Onto Innovation Inc. (NYSE:ONTO) specializes in designing, developing, and manufacturing inspection and measurement tools for the semiconductor industry. Its products help ensure the quality of both patterned and unpatterned wafers, detect defects, and analyze production processes. The company also offers software solutions for process control and lithography systems used in wafers and panel substrates.
On February 6, Onto Innovation Inc. (NYSE:ONTO) reported stronger-than-expected Q4 2024 financial results. Revenue for the quarter reached $264 million, marking a 21% year-over-year increase, while adjusted EPS came in at $1.51, both exceeding consensus estimates. For Q1 2025, the company expects revenue between $260 million and $274 million, implying around 1% quarter-over-quarter growth at the midpoint, while adjusted EPS guidance of $1.40 to $1.54 suggests a 3% decline from Q4.
Despite the solid results, the stock fell over 11% on February 7. Combined with the 14% sell-off on January 27 related to DeepSeek concerns, the stock is down 20% year-to-date, now trading at $133, near the lower end of its 52-week range.
Onto Innovation Inc. (NYSE:ONTO) currently has a consensus Buy rating with a 1-year median price target of $247.50. Acknowledging near-term AI-driven inventory digestion, an Oppenheimer analyst revised his earnings estimates and price target downward to $240 from $275, while maintaining an Outperform rating, expecting demand to rebound in 2026.
5. Carpenter Technology Corp. (NYSE:CRS)
Fwd. P/E: 25
Expected EPS Growth Next FY: 23%
Number of Hedge Fund Holders: 55
Upside Potential: 35%
Carpenter Technology Corp. (NYSE:CRS) specializes in producing high-performance specialty alloy materials and offering innovative process solutions for critical applications across various sectors, such as aerospace and defense, medical, energy, transportation, as well as industrial and consumer markets. The company manufactures and supplies premium specialty alloys, including titanium alloys, powder metals, stainless steels, alloy steels, and tool steels.
Carpenter Technology Corp. (NYSE:CRS) reported pretty strong Q2 2025 (FY ending June) results on January 30. Quarterly operating income surged by an impressive 70% year-over-year to $119 million and EPS nearly doubled to $1.66. Encouraged by the strong results, the company increased its FY 2025 net income guidance to a range of $500 million to $520 million, up from the earlier guide of $460 million to $500 million.
In a report on February 19, BTIG analyst Andre Madrid praised Carpenter Technology Corp.’s (NYSE:CRS) expected growth trajectory with a better-than-expected long-term outlook of adjusted operating income of $765M-800M in FY 2027. The guidance was even stronger considering that it factors in conservative OEM build rates that are below current OEM expectations, as per the analyst. He raised his price target on the shares to $245, from $230 earlier, and reiterated a Buy rating.
4. KLA Corp. (NASDAQ:KLAC)
Fwd. P/E: 15
Expected EPS Growth Next FY: 21%
Number of Hedge Fund Holders: 58
Upside Potential: 20%
KLA Corp. (NASDAQ:KLAC) is a leading provider of process control and yield management solutions for the semiconductor industry. Its extensive portfolio of tools helps semiconductor manufacturers in inspecting and measuring chips, along with data analysis technology, to ensure better production and performance.
KLA Corp. (NASDAQ:KLAC) has delivered strong performance in 2025, outperforming broader indices with a 13% return year-to-date. This momentum has been supported by robust Q2 FY 2025 results, announced on January 30. The company reported 23.7% year-over-year revenue growth, reaching the upper end of its guidance, while adjusted EPS surged 33% year-over-year, reflecting strong profitability. KLA is also a consistent cash flow generator, having produced approximately $3.0 billion in free cash flow (FCF) annually over the past three years. Notably, the company plans to return over 85% of its FCF to shareholders through dividends and share repurchases in the long term.
The company’s impressive performance has reinforced analyst confidence in its future growth. Following the earnings report, Vedvati Shrotre of Evercore ISI reiterated a Buy rating with a $900 price target. Likewise, a BofA analyst maintained a Buy rating while raising the price target from $840 to $900.
3. Teradyne Inc. (NASDAQ:TER)
Fwd. P/E: 27
Expected EPS Growth Next FY: 22%
Number of Hedge Fund Holders: 61
Upside Potential: 29%
Teradyne Inc. (NASDAQ:TER) provides automated test equipment and robotics solutions globally. Its test systems are used to evaluate semiconductors, wireless products, data storage, and complex electronic systems across industries such as consumer electronics, automotive, industrial, and computing. Additionally, its robotics products include collaborative robotic arms and autonomous mobile robots (AMRs) for manufacturing, logistics, and industrial customers worldwide.
In the fourth quarter of 2024, Teradyne Inc.’s (NASDAQ:TER) Semiconductor Test business did well, driven by demand in Cloud AI. However, its industrial automation market remained weak, which impacted the Robotics business and thus partially offset the growth in the test business. That said, the company still managed to post a 12% growth in total revenue and a 20% rise in adjusted EPS of $0.95. For 2025, management expects the test business to continue its momentum and see revenue growth. The company also plans to restructure its Robotics business in early 2025 to improve operational efficiency.
Over the long term, the company is targeting revenue growth from $2.8 billion in 2024 to $5 billion in 2028, implying a CAGR of 12%-18%. At the same time, they expect EPS to grow nearly threefold, from $3.22 to $8.25, during the same period.
Analyst opinions remained positive on the shares. On March 7, analysts from Vertical Research initiated coverage on the shares with a Buy rating and a $135 price target. In early February, a Baird analyst had lowered their price target on Teradyne Inc. (NASDAQ:TER) to $140 from $150 but reiterated his Outperform rating on the shares.
2. Advanced Micro Devices Inc. (NASDAQ:AMD)
Fwd. P/E: 22
Expected EPS Growth Next FY: 42%
Number of Hedge Fund Holders: 96
Upside Potential: 40%
Advanced Micro Devices Inc. (NASDAQ:AMD) is a leading semiconductor company specializing in high-performance computing and graphics solutions. Its diverse product lineup includes microprocessors, graphics processors, and system-on-chip (SoC) solutions, catering to various sectors such as data centers, gaming, and embedded systems. The company has made significant strides in the CPU and GPU markets, positioning itself as a key competitor to Intel Corp. (NASDAQ:INTC) and NVIDIA Corp. (NASDAQ:NVDA).
Despite its market share gains in CPUs, Advanced Micro Devices Inc. (NASDAQ:AMD) has faced challenges in 2024 and 2025, with its stock declining by 18% last year and an additional 17% in 2025. The company’s AI expansion has lagged behind, with slower adoption of its GPUs, putting it at a disadvantage compared to Nvidia. However, AMD continues to benefit from the growing demand in the data center sector, as reflected in its Q4 2024 data center revenue, which surged 69% year-over-year.
To strengthen its position in AI, AMD is expanding its software ecosystem through its ROCm platform and collaborations with hyperscalers, though it still trails its top competitor. Nonetheless, the company is making steady progress. A key step in this direction was the recent launch of its latest graphics architecture, RDNA4, featuring powerful new graphics cards. These cutting-edge products come equipped with 16GB of memory and significant enhancements for delivering high-quality gaming experiences.
1. NVIDIA Corporation (NASDAQ:NVDA)
Fwd. P/E: 25
Expected EPS Growth Next FY: 51%
Number of Hedge Fund Holders: 223
Upside Potential: 55%
NVIDIA Corp. (NASDAQ:NVDA) is a leading designer and manufacturer of graphics processing units (GPUs), system-on-a-chip (SoC) solutions, and AI hardware and software. Over the years, the company has expanded beyond gaming GPUs to become a dominant force in data center solutions, AI computing, and deep learning technologies. Its GPUs are widely deployed in data centers for high-performance computing, AI training, and inference, making NVIDIA a crucial player in the data center ecosystem. The company’s products are integral to powering advanced applications in AI, machine learning, and data analytics.
NVIDIA Corp. (NASDAQ:NVDA) benefited significantly from AI-driven enthusiasm in 2024 but has faced investor caution regarding the incremental gains from AI investments. As a result, its stock has declined 16% so far in 2025.
The company’s highly anticipated Q4 2025 (FY ending January) earnings report, released on February 26, exceeded even elevated expectations. Quarterly revenue grew 12% sequentially and 78% year-over-year to $39.3 billion, surpassing estimates by 2%-3%. Data center revenue climbed 16% quarter-over-quarter to $35.6 billion, while adjusted EPS increased 10% sequentially to $0.89. Its Q1 2026 revenue guidance of $43 billion was also ahead of expectations, but gross margin guide was a bit weaker.
NVIDIA Corp. (NASDAQ:NVDA)’s founder and CEO, Jensen Huang, emphasized the strong demand for Blackwell, highlighting its impact on advancing AI capabilities. He explained that increasing compute power enhances both model training and reasoning, driving smarter outcomes. The company has rapidly scaled up Blackwell AI supercomputer production, generating billions in sales within its first quarter. Huang also noted that AI is evolving at an accelerated pace, with agentic and physical AI driving the next wave of innovation, poised to reshape major industries.
Analyst sentiment remains highly favourable for NVIDIA Corp. (NASDAQ:NVDA), with the majority of analysts assigning a Buy rating to the stock. The consensus one-year median price target suggests a potential upside of 55% from current levels.
While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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