The Picks, According to GARP


There's a herd of investors who follow the GARP -- or growth at a reasonable price -- mantra. These folks look for companies that are growing profits, but they also must have share prices that aren't overpriced relative to that growth. They may also favor shares that have price-earnings multiples below that of the broad Standard & Poor's 500-stock index.

We used this guideline for S&P's latest screen. To find the best candidates for growth, we started with the stocks that are ranked 5 STARS, or buy, by S&P equity analysts. For the "reasonable price" part of the equation, we then took the stocks with a price-earnings to growth ratio below 0.90. Basically, this means the stock is selling at a discount to its growth rate.

Finally, to make sure the candidates have a wide enough following, they had to have at least four Wall Street analysts providing coverage.

These 15 stocks made the grade:

GARP Stocks

Company (ticker)

IndyMac Bancorp (NDE)

ImClone Systems (IMCL)

Capital One Financial (COF)

Bear Stearns (BSC)

Flextronics International (FLEX)

Pacific Sunwear of California (PSUN)

Cree (CREE)

Allstate (ALL)

E Trade Financial (ET)

MBNA (KRB)

Lehman Brothers Holdings (LEH)

Hartford Financial Services (HIG)

AES Corp. (AES)

Apache (APA)

Aetna (AET)


Later, Baby
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