Growth at a reasonable price (GARP) stocks represent a middle ground between growth stocks with high valuations and very conservative value stocks. While growth stocks with high valuations could easily plunge or even go to $0 due to bankruptcy, GARP stocks are unlikely to do either. That’s because their low valuations and generally strong balance sheets make these scenarios very improbable. However, because the companies issuing GARP stocks can grow very rapidly, their shares can climb tremendously. That’s generally not the case for very conservative value stocks whose issuing companies generally do not grow quickly. So, for long-term investors looking for low-risk growth stocks, here are three top-notch names to consider.
GSK (GSK)
GSK (NYSE:GSK) continues to advance on multiple fronts. On Nov. 30, the firm raised its guidance for the sales of its RSV vaccine to over GBP 1 billion in the first 12 months. Previously, the company had expected the shot to generate GBP 900 million to GBP 1 billion during that time frame. Moreover, CEO Emma Walmsley said the shot’s sales could increase much further.
On Dec. 11, the E.U. approved the company’s very promising anti-cancer drug, Jemperli, as the only initial drug for women with a certain type of endometrial cancer. Meanwhile, in a recent trial, Jemperli, together with another GSK drug, Zejula, meaningfully increased the amount of time endometrial cancer patients’ conditions did not worsen. The patients had previously been treated with a combination of Jemperli and chemotherapy.
Given Jemperli’s strong performance in treating rectal cancer and endometrial cancer, I expect it to eventually become a blockbuster drug.
Despite these powerful and positive catalysts, the forward price-earnings ratio of GSK stock is a tiny nine.
Micron Technology (MU)
On Dec. 20, Micron Technology (NASDAQ:MU) reported in its previous quarter, that its top line jumped 15.6% last quarter versus the same period a year earlier, while its operating cash flow came in at $1.4 billion, up from $943 million year-over-year (YoY).
What’s more, Micron CEO Sanjay Mehrotra reported that MU expects its “business fundamentals” to rebound throughout 2024. Among the positive catalysts from which Micron expects to benefit next year are improved supply-demand dynamics, a deal to supply its chips to Nvidia (NASDAQ:NVDA) for use in the latter firm’s AI chips, and strong demand for its products for use in AI applications.
Given Micron’s strong growth and positive outlook, its forward price-earnings ratio of 13 is quite low.
Wendy’s (WEN)
In the first three quarters of 2023, Wendy’s (NASDAQ:WEN) top line climbed 5.3% versus the same period a year earlier to $1.64 billion, while its operating profit jumped 9.7% to $295.4 million. Moreover, its free cash flow jumped 35.4% to $226.4 million.
The company is benefiting from strong growth overseas, as its overseas systemwide sales soared 15.6% in the first three quarters of 2023.
“Global same-restaurant sales accelerated on a 2-year basis and digital sales grew 30% versus the prior year, driving another quarter of Company-operated restaurant margin expansion. Additionally, we have now opened 152 new restaurants across the globe this year,” CEO Todd Penegor said in a statement issued in conjunction with the company’s Q3 earnings.
Going forward, the firm should continue to benefit from its overseas expansion and the resilient American economy.
Given Wendy’s strong growth and excellent prospects, its forward price-earnings ratio of 17.8 is quite attractive.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
