What is GARP Investing?
If you’ve ever bought something on sale — not because it was cheap, but because it was worth more than the price tag — you already understand the basics of GARP.
GARP stands for Growth at a Reasonable Price. It’s a stock investing strategy that asks one simple question: is this company growing, and am I paying a fair price for that growth?
Two Extremes — and Why I Avoid Both
Imagine two investors.
The first buys Tesla at any price because he believes in the future of electric vehicles. Valuation doesn’t matter to him — only growth. This is a growth investor.
The second buys only boring, cheap companies — old retailers, struggling banks — because the numbers look cheap. He doesn’t care much about growth. This is a value investor.
Both approaches have problems. Growth investors sometimes pay so much that even great companies become bad investments. Value investors sometimes buy cheap stocks that stay cheap forever.
GARP tries to find the middle: companies that are genuinely growing, but haven’t been priced to perfection yet.
The Simple Test: PEG Ratio
GARP investors use a tool called the PEG ratio. Don’t let the name scare you — it’s just one number divided by another.
PEG = (Stock Price ÷ Earnings) ÷ Annual Earnings Growth
Think of it this way: if a company earns $1 per share, the stock costs $20, and earnings are growing 20% per year — that’s a PEG of 1.0. Fair value.
If the same stock costs $80? PEG of 4.0. You’re paying four times what the growth justifies.
- Below 1.0 — potentially a bargain
- 1.0 to 1.5 — reasonable
- Above 2.0 — getting expensive
Why This Works in Korea and the U.S.
I invest in both the Korean stock market (KOSPI) and U.S. stocks (S&P 500). Each market has its own personality.
Korean stocks are often too cheap — many good companies trade at low valuations because of governance issues or lack of foreign investor interest. But cheap alone isn’t enough. I want cheap and growing.
U.S. stocks are often too expensive — great companies, but priced for perfection. One bad earnings report and the stock drops 20%. GARP helps me avoid overpaying.
The PEG ratio works as a common language across both markets.
What This Blog Is
I’m not a professional investor. I’m a Korean individual investor who built his own screening system and decided to track it publicly — in English, so global investors can follow along.
Every month I’ll share what I’m buying, what I’m avoiding, and why. No jargon. No financial advice. Just one investor’s honest record.