Harmony Gold Mining (NYSE:HMY) Emerges as a Top GARP Stock Pick

For investors looking for growth without a high cost, the "Growth at a Reasonable Price" (GARP) method presents a worthwhile option. This method tries to find companies that are increasing their earnings and sales at a good rate, but whose stock prices are not excessively high. It avoids the high risk of speculative stocks and also avoids cheap companies that have serious problems, companies that are inexpensive for a cause. One useful method to apply this strategy is by using systematic filters, searching for stocks that show good growth, have acceptable financial condition and earnings, and are available at moderate prices. Harmony Gold Mining Co. Ltd. (NYSE:HMY) recently appeared in such a filter, indicating it could deserve more attention from investors focused on GARP.

A Good Growth Picture

The central idea of any growth investment is, expectedly, growth. Harmony Gold’s recent results in this area are solid. The company’s fundamental analysis report indicates good momentum in its main financial measures.

• Earnings Per Share (EPS) rose by 66.97% over the previous year, a notable number that shows important bottom-line improvement.
• Revenue also recorded good growth, going up by 20.39% in the last year. This is not an isolated occurrence; the company has shown a very good average yearly revenue growth of 20.37% over recent years.
• Considering the future, analysts believe this positive trend will persist. Predictions indicate EPS growth of about 25.45% each year in the next few years, together with expected revenue growth averaging 14.33% per year.

This mix of good past performance and a sound future growth view is important for the affordable growth idea. It gives proof that the company's increase is both recent and likely to continue, instead of being a temporary irregularity.

Attractive Valuation Measures

Growth by itself is insufficient; it must be available at a fair price. This is where the "reasonable price" part of the strategy is relevant, and Harmony Gold's valuation measures seem particularly appealing. The stock's valuation score of 9 out of 10 points to this advantage.

• Price-to-Earnings (P/E): With a P/E ratio of 14.65, HMY trades at a large discount compared to both the wider S&P 500 average (26.43) and its industry group in the Metals & Mining sector, where the average P/E is above 32. It is less expensive than over 92% of its industry rivals on this measure.
• Forward P/E: An even more attractive view appears when looking ahead. Based on predicted earnings, HMY's Price/Forward Earnings ratio is only 6.62. This is much less expensive than the S&P 500 average (23.66) and signals a very low valuation within its own industry.
• Growth Compensation: The low PEG ratio, which modifies the P/E for growth, further implies the market is not completely valuing the company's expected earnings increase. This forms the possible "affordable growth" chance the filter aims to find.

Supporting Basics: Condition and Earnings

For growth to be lasting and for a moderate valuation to be a real chance, a company needs a sound base. Harmony Gold performs well here, with an earnings score of 8 and a condition score of 7. These scores signal the growth is happening from a place of operational soundness and financial steadiness.

• Earnings Soundness: The company produces very good returns on its capital. Its Return on Invested Capital (ROIC) of 20.62% and Return on Equity (ROE) of 22.97% both put it in the high rank of its industry, doing better than over 93% of peers. Good and improving operating and gross margins further point to efficient operations.
• Financial Condition: The company shows very good solvency. Its low Debt/Equity ratio of 0.04 shows very little dependence on debt financing, and an Altman-Z score of 7.70 signals a very small short-term chance of financial trouble. While its current and quick liquidity ratios are more moderate, they are assessed alongside its very good earnings and solvency, suggesting the company handles its working capital suitably for its business type.

Conclusion

Harmony Gold Mining displays a profile that matches well with the ideas of affordable growth investing. It is a company showing strong, double-digit growth in both earnings and revenue, with analysts predicting this momentum will keep going. Importantly, this growth narrative is not paired with a high stock price; instead, the shares trade at valuation levels that are heavily reduced compared to the market and its industry. This mix is backed by high-rank earnings measures and a solid balance sheet, implying the growth is based on a lasting foundation rather than financial tactics or extreme risk.

For investors using a GARP strategy, HMY illustrates the kind of chance filtering can show: a basically sound business growing at a good pace, yet valued as if it were not moving. A complete summary of these fundamental scores is provided in the full ChartMill Fundamental Analysis report for HMY.

Find More Affordable Growth Options Harmony Gold was found using a particular filter for stocks displaying good growth, acceptable fundamentals, and moderate valuations. If this process fits your investment method, you can review a new list of matching companies by going to the Affordable Growth Stock Screener on ChartMill.

Disclaimer: This article is for information and learning only and is not a suggestion to buy, sell, or keep any security. The analysis uses data and scores from ChartMill and other sources, which can change. All investing has risk, including the possible loss of initial investment. Investors should do their own separate research and think about their personal financial situation and risk comfort before making any investment choice.