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3 Stocks for GARP Investors

These stocks sell growth at reasonable prices

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Alberto Abaterusso
Sep 07, 2021

Summary

  • TD Synnex, Timken and UFP Industries appear to be suitable investments for GARP investors.
  • Their market valuations are reasonable.
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There are some investors who believe growth is important, but also do not want to pay too much for it. They are looking for the union of growth and value when searching for good investment opportunities.

The five common fundamental indicators that "growth at a reasonable price," or "GARP" investors, refer to when they assess the outlook of a stock include:

  1. Trailing 12-month and forward PEG ratios are less than or equal to 2.
  2. A more than 5% yearly average increase in the trailing 12-month net income margin over the past five years.
  3. Earnings are projected to increase more than 10% every year for the next five years.
  4. A positive trend in trailing 12-month operating income over the past five years.
  5. A price-earnings ratio less than or equal to 25.

Thus, GARP investors could be interested in the following stocks since they meet the above criteria.

TD Synnex

The first stock GARP investors could be interested in is TD Synnex (

SNX, Financial), a Fremont, California-based provider of business process services in the Americas, Europe, Africa and Asia-Pacific.

The stock closed at $127.65 per share on Friday for a market cap of $12.16 billion and a price-earnings ratio of 12.41. The trailing 12-month PEG ratio was 0.75 and the forward PEG ratio was 1.18, based on a past five-year Ebitda growth rate of 16.50% and projected five-year earnings per share growth rate of 10.57%.

The net income margin (2.14% as of the most recent full fiscal year) increased by about 6.2% per annum over the past five years, while the operating income ($830.1 million as of the most recent year) increased by 20.8% per annum over the same period.

GuruFocus assigned the company a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10.

The share price has risen by 106.7% over the past year, fluctuating in a 52-week range of $61.39 to $130.93.

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Timken

The second stock GARP investors could be interested in is The Timken Co. (

TKR, Financial), a North Canton, Ohio-based designer, manufacturer and marketer of bearings and power transmission products.

The stock closed at $72.16 per share on Friday for a market cap of $5.45 billion and a price-earnings ratio of 15.27. The trailing 12-month PEG ratio was 0.90 and the forward PEG ratio was 1.17, based on a past five-year Ebitda growth rate of 16.90% and a projected five-year earnings per share growth rate of 13.10%.

The net income margin (8.10% as of the most recent full fiscal year) rose by 9.1% per annum over the past five years, while the operating income ($476.1 million as of the most recent fiscal year) increased by about 18.1% per annum.

GuruFocus assigned the company a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10.

The share price has increased by 32.24% over the past year, fluctuating in a 52-week range of $52.51 to $92.3856.

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UFP Industries

The third stock that GARP investors could be interested in is UFP Industries Inc. (

UFPI, Financial), a Grand Rapids, Michigan-based lumber producer.

The stock closed at $73.59 per share on Friday for a market cap of $4.51 billion and a price-earnings ratio of 10.84. The trailing 12-month PEG ratio was 0.61 and the forward PEG ratio was 0.64, based on a past five-year Ebitda growth rate of 11.20% and projected five-year earnings per share growth rate of 17%.

The net income margin (4.79% as of the most recent full fiscal year) rose by 10.8% per annum over the past five years, while the operating income ($158.58 million as of the most recent year) rose by about 19.2% per annum.

GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10 to the company.

The share price has gained nearly 31% over the past year, fluctuating in a 52-week range of $48.82 to $89.97.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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