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The Growth at a Reasonable Price (GARP) Strategy looks for companies whose price is low relative to their earnings growth (PEG of 1 or below), between growth and value investing. It turns Peter Lynch's principles into rules.
Born in 1944 in Massachusetts. As a teenage golf caddie he met the president of Fidelity, which led to a summer job there in college. After Boston College, a Wharton MBA and military service, he joined Fidelity in 1969.
From 1977 to 1990 he ran the Magellan Fund for 13 years, averaging about 29% a year. Assets grew from $18 million to $14 billion, and at 46 he stepped down from managing the fund to spend time with his family.
One Up on Wall Street (1989) and Beating the Street (1993) made him a major influence on individual investors. He is often remembered for saying you can find stocks in everyday life, but for him that was only where research started; the reason to buy was always the numbers.
With growth stocks it is easy to see a good company but hard to tell whether the price is cheap. Lynch used PEG, the P/E divided by the earnings growth rate. A P/E of 30 gives a PEG of 1.0 if earnings grow 30% a year, but 3.0, which is expensive, if they grow 10%.
A PEG of 1.0 or below is cheap for its growth, 0.5 or below is very cheap, and 2.0 or above is to be avoided.
Growth above 50% a year draws competitors and outruns what companies can manage, so it usually breaks. When it does, the high P/E falls too and you lose twice. He preferred growth of 15 to 30% a year that lasts.
If earnings grow while sales stay flat, the gain may come from cost cutting, which runs out eventually.
With little debt, a company survives a pause in growth. A growth stock with heavy debt can be in danger after one bad result.
Slow growers, stalwarts, fast growers, cyclicals, turnarounds and asset plays, each with its own expected return and selling rule. Look for tenfold gains among fast growers, and switch stalwarts after gains of 30 to 50%. This site scores by the fast-grower standard.
If he could not briefly say why a company would grow and what could stop it, he did not hold it, because there would be nothing to hold on to when the price fell.
This strategy model was independently built by Confluence Zone to quantify the investment philosophy in the works above. It is not an official model created, endorsed or reviewed by Peter Lynch or any related institution. Last reviewed: 2026-09-29
Related terms: PEG · PER · Market Cap
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