Bars

What Is Growth at a Reasonable Price (GARP)?

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

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.

Loading paragraph...

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

Loading image...

Loading paragraph...

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.

Loading paragraph...

How to Research Stocks

Good research can help investors find the best companies to invest in.

How to Buy Cava Stock (CAVA) and What Investors Should Know Before They Do

The Mediterranean restaurant chain completed its IPO in mid-June 2023. Here's what you need to know to place an order.

Warren Buffett's Investment Strategy

The Oracle of Omaha is very rich -- but his investment strategy is simple.

Who Owns Nike?

Nike has been a publicly traded company for a long time. See how its ownership breaks down and who sits on the board of directors.

Loading hub_pages...

Loading paragraph...

Data source: Nasdaq.com.

Loading table...

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

Loading paragraph...

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.

TMFmd19

@MatthewDiLallo

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.