Alamos Gold Inc. (NYSE:AGI) Emerges as a Prime GARP Investment Candidate

For investors looking for a mix of solid growth and fair price, the "Affordable Growth" or "Growth at a Reasonable Price" (GARP) method presents a notable middle path. This method tries to find companies that are not only increasing quickly but also have good basic business health, all while being priced at levels that do not require flawless future results. It tries to steer clear of paying too much for extreme growth while still joining in a company's positive path. A recent search for such chances, which looked for stocks with good growth, acceptable profit and financial strength, and a price that is not too high, has pointed to ALAMOS GOLD INC-CLASS A (NYSE:AGI) as a candidate for more review.

A Base of Good Growth

The central idea of any GARP method is, expectedly, growth. Alamos Gold shows this clearly, receiving a high Growth Rating of 9 out of 10 from ChartMill's basic analysis. The company's recent results and future view illustrate a pattern of speeding increase.

• Notable Past Growth: Over the last year, Alamos Gold increased its Earnings Per Share (EPS) by a remarkable 61.76%, while revenue rose by 31.30%. The average yearly EPS increase over recent years is a very good 29.78%.
• Speeding Future View: Maybe more significant, this growth path is projected to persist and even get better. Analyst forecasts indicate an average yearly EPS increase of 40.43% and revenue increase of 23.54% in the next years. The basic report states that both EPS and revenue increase rates are speeding up, showing positive business motion.

For an affordable growth method, this mix of confirmed results and a positive forecast is necessary. It gives a concrete foundation for the investment idea beyond simple guesswork.

Price Assessment in Perspective

A stock with high growth can still be a bad investment if its cost is too steep. The GARP method specifically looks for stocks that are "not overpriced," and Alamos Gold's Valuation Rating of 6 indicates a varied but finally acceptable situation when growth is considered.

• Standard Measures Seem High: On the surface, a Price-to-Earnings (P/E) ratio of 34.99 seems costly, both compared to the S&P 500 average and on its own.
• Industry-Relative and Future-Looking Price: The setting is key. Compared to similar companies in the Metals & Mining industry, AGI's P/E ratio is actually lower than 66% of the sector. More revealing is the future P/E ratio of 16.04, which is lower than the S&P 500 average and shows a more acceptable price based on next year's projected earnings.
• Growth Adjustment is Central: The most important measure for a GARP review is the PEG ratio, which modifies the P/E for growth. ChartMill's report says that AGI's "low PEG Ratio... shows a rather low price of the company." This directly speaks to the affordable growth idea: you are paying for growth, but not a very high amount relative to the growth rate projected.

Supporting Basics: Profit and Strength

Lasting growth cannot exist without a profitable business operation and a firm financial base. These are the "acceptable profit and strength" filters that guard the GARP method from following weak companies. Alamos Gold rates well here, with Profit and Strength Ratings of 8 and 7, in order.

• High Profit Margins: The company has excellent margins, with a Profit Margin of 33.46% and an Operating Margin of 43.88%, doing better than over 90% of its industry peers. Good Return on Equity (13.33%) and getting better Return on Invested Capital further prove the effectiveness of its activities.
• Firm Financial Strength: Financially, Alamos Gold is in a good state. It has a very low Debt/Equity ratio of 0.07 and an excellent Debt-to-Free-Cash-Flow ratio of 1.11, meaning it could pay off all debt with just over a year of cash flow. A good Altman-Z score of 5.69 shows low short-term failure risk.

These parts are important for the affordable growth method because they lower risk. A company with high margins and a clean balance sheet is more ready to handle economic changes and pay for its growth from within, making its growth forecasts more dependable.

Summary and Next Steps

Alamos Gold displays a profile that matches closely with the goals of an affordable growth investor. It presents speeding, high-quality growth in both earnings and revenue, backed by industry-leading profit and a careful balance sheet. While its past P/E ratio may cause some hesitation, its price becomes much more interesting when seen through the views of industry comparison, future earnings, and, most significantly, its growth rate (the PEG ratio).

This review came from a systematic search made to find such chances. Investors wanting to see the full basic report for Alamos Gold can locate it here.

For those trying to find other companies that match the Affordable Growth description, you can view the pre-set search here.

Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer or request to buy or sell any securities. The review uses data and ratings from ChartMill, and investors should do their own review and talk with a qualified financial advisor before making any investment choices. Past results do not guarantee future outcomes.