The GARP Guide to Good Buys

This S&P screen finds strong growth candidates, then narrows the field by screening for reasonable p-e ratios

By Michael Kaye, CFA

Companies with the potential for solid earnings growth can be attractive investment candidates. But amid a richly valued stock market, investors may balk at paying above-market price-earnings multiples for those names. That's where this week's screen comes in. S&P's investing methodology features as one of its cornerstones GARP -- growth at a reasonable price.

Taking that as our guide, we looked for companies with promising prospects: growth rate estimates in the top 10% of S&P 500 companies, according to research firm I/B/E/S. Then we took care of the "reasonable price" part by screening for issues with a p-e ratio below that of the S&P 500.

These six names emerged:

GARP, according to S&P
Company/ticker S&P STARS Rank
Freeport McMoRan Copper & Gold (FCX ) 2
Big Lots (BLI ) 3
Kohl's (KSS ) 3
Ingersoll-Rand (IR ) 3
Express Scripts (ESRX ) 3
EOG Resources (EOG ) 4

Kaye is a portfolio services analyst for Standard & Poor's

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