Growth at a reasonable price. GARP is the price-to-earnings ratio of the company in relation to the growth of the business. This is represented by the analyst's mean estimate of sustainable growth for the business forecasting 3 to 5 years in the future. A ratio of less than one is viewed as low while ratios well over 1 are viewed as expensive. If a company has a forecast growth of 15% over the next 3 to 5 years, but is selling at a P/E over 35, this might be viewed as a non-GARP. However, a growth rate of 30% with a P/E of 20 times, would, subject to further analysis, represent a possible GARP stock.
Garp is the name given to the approach to qualitative reasoning developed by B. Bredeweg (published as PhD thesis by the University of Amsterdam in 1992). One of the main goals behind Garp was to unify three alternative approaches to qualitative reasoning ( QPT, Envision, and QSIM), into a single framework for Expertise in Qualitative Prediction of Behaviour. Garp has been further developed since, incorporating new reasoning features and increasing usability. At this moment Garp3 (the latest version of the software) implements an advanced workbench for building, simulating, and inspecting qualitative models.
Standing for "growth at a reasonable price," this is an investment approach meant to combine growth and value tenets.