Investing term
What is GARP — growth at a reasonable price?
A style that pays for growth, but not at any price — looks for moderate multiples on above-average growth.
GARP — growth at a reasonable price — is a middle-ground style that seeks companies growing faster than average but still trading at sensible valuations. It tries to avoid both overpriced hype stocks, where you pay too much for growth, and cheap-but-stagnant value stocks, where the low price reflects a business going nowhere.
The idea is that the best risk-adjusted returns often come not from the fastest growers (usually priced for perfection) nor the cheapest laggards (often cheap for a reason), but from solid, above-average growth bought at a fair multiple. Tools like the PEG ratio — P/E relative to growth — embody the GARP mindset, asking not just whether a stock is cheap or growing, but whether its price is reasonable given its growth. GARP is a blend of growth and value investing, refusing to ignore either the quality of the business or the price paid for it.
GARP sits between value and growth — above-average growth bought at a sensible multiple. It avoids overpaying for hype and buying cheap junk, embodied in the PEG ratio's balance of growth and price.
For example
A company growing earnings 15% a year at a 18× P/E may appeal to a GARP investor — faster than average, but not the sky-high multiple a pure growth stock commands.
Learn it by doing
That's GARP — growth at a reasonable price in theory — it clicks when you use it. Practise it hands-on in a free, interactive lesson (Stage 15, Valuation for Investors).
Try the free lesson →Why it matters to you
GARP matters because it addresses the core tension between growth and value: growth is worth paying for, but not at any price. By insisting on both above-average growth and a reasonable valuation, it aims to avoid the two classic mistakes — overpaying for hype and buying cheap junk. It's a discipline that keeps the price paid in view even when chasing growth, which is exactly where pure growth investing can go wrong.
⚠ Calling any middling stock 'GARP'
GARP requires genuinely above-average growth at a genuinely reasonable price — not just a mediocre company at a middling multiple. It's easy to justify almost any stock as 'GARP' by loosening the definition of either growth or reasonableness. Applied loosely, it becomes an excuse rather than a discipline. The style only works if both the growth and the valuation are held to a real standard.