Zacks.com strengths include East West Bancorp, Automatic Data Processing, CDW and Qualcomm
For immediate release
Chicago, IL – March 18, 2022 – Stocks in this week’s article are East West Bancorp EWBC, Automatic Data Processing ADP, CDW Corp. CDW and Qualcomm QCOM
4 GARP stocks for a winning portfolio
Investors looking for stocks with the potential for maximum growth and value investing may consider Growth at a Reasonable Price or the GARP strategy.
This popular strategy helps investors gain exposure to stocks with impressive growth prospects that are trading at a discount. GARP investing uses popular measures of value — price-to-earnings (P/E) and price-to-book (P/B) — to assess whether a stock is undervalued.
GARP Metrics – Mixture of Growth and Value Metrics
The GARP strategy seeks to provide an ideal investment by utilizing the best characteristics of value and growth investments. Investors taking the GARP approach will prefer to buy stocks that are priced below the market or any reasonable target determined by fundamental analysis. These stocks also have strong prospects for cash flow, revenue, earnings per share (EPS), and more.
A strong track record of earnings growth and impressive earnings prospects are the main concepts that GARP investors borrow from the growth investing strategy. However, instead of higher than normal growth rates, looking for stocks with a more stable and reasonable growth rate is also a tactic of GARP investors. Therefore, growth rates between 10% and 20% are considered ideal under the GARP strategy.
Another measure of growth considered by both growth investors and GARP investors is return on equity (ROE). GARP investors look for a strong, higher ROE relative to the industry average to identify superior stocks. In addition, stocks with positive cash flows find priority under the GARP plan.
GARP investing prioritizes one of the popular measures of value – the price-to-earnings (P/E) ratio. Although this style of investing selects stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios. In addition, the price-to-book (P/B) ratio is also taken into account.
Using the GARP principle, we ran a screen to identify stocks that should offer strong returns in the near term.
Here are four actions that crossed the screen:
Bancorp East-West serves as a financial bridge between the United States and Greater China by providing various personal and commercial banking services to small and medium-sized businesses, business executives, professionals and other individuals. The company currently carries a Zacks Rank #2. You can see the full list of today’s Zacks #1 Rank stocks here.
East West Bancorp has a four-quarter earnings surprise of 8.39% on average. EWBC’s 2022 Zacks consensus estimate has moved north 6.6% to $6.49 per share in the past 60 days.
Automatic data processing is a provider of cloud-based human capital management technology solutions, including payroll, talent management, human resources and benefits administration, and time and attendance management. The company carries a Zacks Rank #2.
Automatic data processing has an earnings surprise for the last four quarters of 5.5% on average. The Zacks consensus estimate for ADP’s fiscal year 2022 has moved north 0.7% to $6.82 per share in the past 60 days.
CDW Corp. is a leading provider of integrated information technology (IT) solutions for small, medium and large businesses, governments, educational institutions and healthcare. The company currently carries a No. 2 Zacks rank.
CDW has a four-quarter earnings surprise of 9.8% on average. The Zacks consensus estimate for 2022 has moved north 6.2% to $9.27 per share in the past 60 days.
Qualcomm designs, manufactures and markets wireless digital telecommunications products and services based on Code Division Multiple Access technology. The company currently carries a No. 2 Zacks rank.
Qualcomm has a four-quarter earnings surprise of 12.22% on average. The Zacks consensus estimate for Qualcomm’s fiscal year 2022 has moved north 11.9% to $11.76 per share in the past 60 days.
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