The year 2024 has kicked off with a strong performance in the stock market, with the S & P 500, Dow Jones Industrial Average, and Nasdaq Composite all showing gains in the first quarter. However, the second quarter has started on a slightly shaky note, with all three major averages experiencing a decline of more than 1%. Despite this, there are still opportunities for investors to capitalize on companies that offer growth potential at reasonable prices.
One way to identify such opportunities is by using the “growth at a reasonable price” (GARP) methodology. This approach focuses on stocks that demonstrate strong growth prospects while also trading at attractive valuations. By combining offensive and defensive characteristics in a portfolio, investors can create a well-rounded investment strategy. CNBC Pro conducted a screening process and uncovered several GARP opportunities across a variety of sectors in the S & P 500.
Within the consumer discretionary sector, companies such as Royal Caribbean and Las Vegas Sands have shown promise. Royal Caribbean is projected to grow its earnings by over 40% this fiscal year and is currently trading at a price-to-forward-earnings ratio of 13.2. Similarly, Las Vegas Sands has a forward P/E of 18.4, indicating potential for growth in the coming months. Restaurant chain Yum Brands is another notable name on the GARP list, with analysts forecasting a 12% increase in earnings per share for 2024.
In the healthcare sector, Cigna Group and Cardinal Health stand out as GARP opportunities for investors. Cigna is trading at a forward P/E ratio of 12.2, with earnings expected to rise by 13.3%. The stock has already seen a significant rally year to date, indicating positive momentum. Cardinal Health, on the other hand, could experience a 26% surge in earnings and is trading at a slightly higher forward P/E ratio of 14.3. Despite this, shares have still risen by 9.9% in 2024, making it an attractive option for investors looking for growth potential in the healthcare industry.
2024 presents several opportunities for investors to capitalize on companies that offer growth at reasonable prices. By utilizing the GARP methodology and conducting thorough screenings, investors can identify promising stocks across various sectors in the market. With a strategic investment approach, investors can build a diversified portfolio that combines both growth potential and attractive valuations, ultimately leading to long-term success in the stock market.