What Is Growth at a Reasonable Price (GARP)?

By Matthew DiLallo – Updated Jul 2, 2025 at 12:15 AM

Key Points

GARP combines growth and value investing, focusing on stocks with high earnings growth and fair valuations.
PEG ratio under 1 is vital for GARP; it equals a stock’s P/E ratio divided by expected earnings growth.
Investors can find GARP stocks using tools like the S&P 500 GARP Index or related ETFs.

Growth at a reasonable price (GARP) is a stock investing strategy popularized by famed investor Peter Lynch. It seeks to combine the best facets of growth and value investing approaches to select individual stock investments. GARP investors aim to find companies delivering above-average revenue and earnings growth that trade at a reasonable valuation. This strategy should yield attractive returns with less volatility than an extreme growth-focused investment approach.

Here's a closer look at GARP investing, including the formula for finding GARP stocks, how to use this strategy, and an example of a top GARP stock.

Person viewing charts on multiple monitors. — Image Source: Getty Images

What is GARP?

Growth at a reasonable price (GARP) is a strategy where investors seek growth stocks that trade at a fair valuation. This approach combines features from the growth and value investing philosophies. It strives to discover companies growing their earnings and revenue at an above-average rate. But it also seeks companies that trade at a reasonable valuation multiple, such as the price to earnings (P/E) ratio, compared to the broader market.

Revenue

Revenue is a business’s gross income or the amount of money it brings in from regular operations before costs are considered.

While GARP investing combines key tenets from growth investing and value investing, it also has some notable differences. Growth investors are often willing to pay for growth at any price, even if it's extreme, while GARP investors are only willing to pay a reasonable price for growth. Meanwhile, value investors seek to find stocks trading at a bargain price, giving them a margin of safety. Conversely, GARP investors are willing to pay more for a company growing at an above-average rate.

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An example of a top GARP stock

GARP investors often forecast a company's PE ratio and earnings growth rate a few years into the future. This allows them to see if the current price is reasonable, given the company's growth expectations. Here's an example of the growth expectations for the social networking giant Meta Platforms in mid-2023:

Data source: Nasdaq.com.
Year	PE Ratio	Earnings Growth Rate	PEG Ratio
2023	20.4	22.5	0.9
2024	16.6	22.9	0.7

That reasonable PEG ratio would make GARP investors interested in investing in Facebook's parent Meta Platforms.

About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.