Peter Lynch, renowned for his management of Fidelity’s Magellan Fund, inspired a systematic investment model developed by Validea. This framework embodies the Growth At a Reasonable Price (GARP) philosophy, seeking companies with strong growth potential that remain affordably valued.
The PEG ratio serves as the strategy’s foundation, comparing a company’s price-to-earnings ratio against its earnings growth rate. Stocks with PEG ratios below 1.0 potentially represent undervalued growth opportunities.
Consistent earnings progression is highly valued in this approach, with particular emphasis on businesses demonstrating steady 20-30% annual growth. The model maintains healthy skepticism toward extraordinarily high growth figures, recognizing their potential unsustainability.
Lynch’s methodology distinguishes between three business categories—slow growers, stalwarts, and fast growers—each requiring tailored analytical frameworks.
The strategy also emphasizes financial stability, favoring companies with prudent debt management as reflected in their debt-to-equity ratios. This focus on sustainable leverage helps identify businesses better equipped to navigate economic downturns.
Discover how Validea’s models can help you identify high-quality, long-term investments, even in changing market conditions. Visit Validea.com to access in-depth stock analysis and tools designed to emulate proven investment principles. Take a Free Trial Today!
Here are the top ten highest scoring stocks for March of 2025 based on Validea’s Peter Lynch strategy.
| Ticker | Company Name | P/E/Growth Investor | Price | Market Cap ($mil) | PE Ratio | Price/ Sales | Relative Strength | Price/ Book | Price/ Cash Flow | Dividend Yield | Long-Term EPS Growth |
|---|---|---|---|---|---|---|---|---|---|---|---|
| AX | AXOS FINANCIAL INC | 100 | $64.21 | $3,666 | 8.7 | 3.0 | 77 | 1.5 | 7.9 | 0.0% | 25.9% |
| BAP | CREDICORP LTD | 100 | $193.51 | $15,371 | 10.2 | 2.5 | 69 | 1.6 | 8.8 | 0.0% | 40.0% |
| BIDU | BAIDU INC (ADR) | 100 | $94.54 | $33,151 | 10.1 | 1.8 | 51 | 0.9 | 7.7 | 0.0% | 31.0% |
| HRTG | HERITAGE INSURANCE HOLDINGS INC | 100 | $13.57 | $415 | 6.8 | 0.5 | 83 | 1.4 | 5.6 | 0.0% | 37.9% |
| OFG | OFG BANCORP | 100 | $40.19 | $1,826 | 9.5 | 2.6 | 71 | 1.5 | 8.1 | 2.4% | 27.3% |
| OZK | BANK OZK | 100 | $44.31 | $5,034 | 7.2 | 3.0 | 56 | 0.9 | 6.4 | 3.6% | 17.0% |
| PLAB | PHOTRONICS INC | 100 | $21.01 | $1,335 | 8.9 | 1.6 | 36 | 1.2 | 4.7 | 0.0% | 36.3% |
| TCBX | THIRD COAST BANCSHARES INC | 100 | $33.40 | $461 | 13.4 | 2.7 | 91 | 1.0 | 9.8 | 0.0% | 29.2% |
| NTES | NETEASE INC (ADR) | 98 | $97.05 | $62,548 | 15.3 | 4.3 | 50 | 3.3 | 13.9 | 2.7% | 22.1% |
| NWG | NATWEST GROUP PLC – ADR | 98 | $12.00 | $47,835 | 8.9 | 2.4 | 92 | 1.6 | 6.4 | 0.0% | 20.9% |
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