We recently published a list of 10 Best GARP Stocks to Buy Now. In this article, we are going to take a look at where NVIDIA Corp. (NASDAQ:NVDA) stands against other best GARP stocks to buy now.
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).”
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%.
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).
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
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.
Overall, NVDA ranks 1st on our list of best GARP stocks to buy now. 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
Disclosure: None. This article is originally published at Insider Monkey.
