So-called 'GARP' stocks tend to have characteristics of both growth and value factors.
After the artificial intelligence craze helped fuel a comeback rally for stocks in the first half of the year, investors should consider shifting their attention toward a long-term strategy, according to BMO Capital Markets. Chief investment strategist Brian Belski said in a July 26 note to clients that "growth at a reasonable price" stocks should be key holdings of the riskier portion of an investment portfolio.
"Even with the slight deterioration in relative earnings growth, the [next 12 months] PEG ratio has declined sharply and is only slightly above a historically low level ... which to us suggests a quite favorable backdrop for GARP stocks," Belski wrote. BMO's list of stocks that fit the GARP profile and have outperform ratings from the firm's analysts have had varying degrees of success so far this year. They also cut across sector groups.
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