Growth at a Reasonable Price, or GARP, was a term popularised by the American fund manager Peter Lynch in the 1980s.
It describes a middle ground between value investing, which hunts for cheap shares, and pure growth investing, which pays up for future potential.
GARP investors look for companies that can grow earnings at a solid clip but whose valuations are not excessive relative to that growth, often measured by the price/earnings to growth (PEG) ratio.
Panmure Liberum’s latest “Monthly Movers” note argues that GARP opportunities still exist among UK industrials, where several quality names trade below their long-term valuation averages despite credible growth outlooks.
The broker singles out Johnson Matthey PLC (LSE:JMAT), Renishaw PLC (LSE:RSW), and Spirax Group PLC (LSE:SPX) as standouts: all are trading below historic cyclically adjusted price/earnings (CAPE) ratios while offering mid-term earnings growth in the high single digits.
Johnson Matthey, in particular, screens well on valuation grounds, trading at a discount to both its own history and peers such as Halma and IMI.
Panmure believes the group’s focus on simplifying its portfolio and strengthening cash generation gives scope for re-rating if it can deliver steady earnings momentum.
Renishaw, meanwhile, looks well placed to benefit from improving conditions in machine tools and precision engineering, though the shares already price in some execution risk. Spirax-Sarco also appears attractively priced if its mid-term targets hold.
For investors willing to balance patience with discipline, Panmure’s analysis suggests that the old GARP philosophy may still yield a few well-priced growth stories.