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Fundamentals scan

GARP Screener

This scan finds stocks with earnings per share growing more than 25% a year, a P/E ratio below 25, and a price above the 50-day moving average.

Run this scan in the live demoFree, no sign-up. The demo uses made-up sample data.

The exact rule

Type this in Chalni: eps growth above 25% and pe below 25 and close above 50 day sma

  1. EPS growth % > 25
  2. P/E < 25
  3. Close > SMA(50)

Find US stocks where EPS growth (%) is above 25; and the P/E ratio is below 25; and the closing price is above the 50-day simple moving average.

Formula view
eps_growth_pct > 25
AND pe_ratio < 25
AND close > sma(close, 50)
Example chart: Growth at a fair priceDaily candles of a made-up sample stock with 50-day SMA. The shaded day is the day the scan fired.
  • 50-day SMA
  • Shaded day: the scan fired
Example from Chalni's made-up sample market, not a real stock. It shows the most recent time this scan fired in the sample US market, picked whether or not the trade worked.

What it means

GARP (growth at a reasonable price) sits between growth and value investing. Fund manager Peter Lynch made it famous: he liked growing companies whose P/E was not much higher than their growth rate.

With growth above 25% and a P/E below 25, every stock this scan finds has a P/E lower than its growth rate. That means a PEG ratio below 1, a classic GARP target.

How traders use it

  • Check that the growth is steady over several quarters.
  • Compare with other companies in the same industry.
  • The trend rule helps you avoid growth stocks the market has stopped believing in.

Watch out for

  • High growth rarely lasts forever, and a slowdown can hit the price hard.
  • One strong quarter can make growth look better than it is.

Test it before you trust it

Every scan in Chalni sits an exam. First it runs on older data, the practice: each time it picks a stock, the stock is held for 10 trading days and 0.2% is paid in costs. Then it runs on newer data it has never seen, the exam. A scan that only works in practice has just memorised the past.

See the practice and exam results for this scan in the demo (on sample data; real data comes at launch).

Questions

What is GARP investing?

Growth at a reasonable price: buying companies with strong earnings growth that are not too expensive compared with that growth.

What is a PEG ratio?

The P/E ratio divided by the earnings growth rate. A PEG below 1 is often seen as attractive.

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