For investors looking to balance the search for growth with fiscal care, the Growth at a Reasonable Price (GARP) or "affordable growth" strategy offers a sensible middle path. This method tries to find companies showing strong and lasting growth, but whose shares are not valued at extreme levels that assume many years of future success. By looking for stocks with good growth, solid profit foundations, sound finances, and a fair price, investors can search for chances where the market may not have completely seen a company's possibilities, which could provide a more acceptable balance of risk and reward compared to pure momentum or deep-value investments.
A Closer Look at The Trade Desk
The Trade Desk Inc. (NASDAQ:TTD) runs a cloud platform that lets advertisers plan, buy, and improve data-led digital ad campaigns across formats such as connected TV, video, display, and audio. As a top company in programmatic advertising, its model is connected to the ongoing move of advertising spending toward digital and data-focused channels. A recent review of the company's basics, available in its full report, shows a picture that fits well with the affordable growth idea, receiving a good 7 out of 10 overall.
Growth: A Main Feature
The company’s growth record is a key part of its attraction. The Trade Desk gets a high Growth score of 8, supported by notable past results and good future outlook.
- Past Performance: Over the last year, revenue increased by 20.82%, while earnings per share (EPS) rose 21.09%. The longer-term view is even stronger, with a 5-year average yearly revenue growth rate of almost 30% and EPS growth averaging 35%.
- Future View: Analysts expect this progress to keep going, though at a somewhat slower speed that is more maintainable. Coming estimates suggest average yearly EPS growth of almost 17% and revenue growth of about 16% in the next few years.
This steady, double-digit growth in both revenue and profit shows the company's capacity to grow its platform well and take market position in a growing field.
Valuation: Fair Given the Situation
With a Valuation score of 5, The Trade Desk presents a situation where growth does not come with an extremely high price. Important measures indicate the stock is valued fairly, particularly when measured against wider market indexes.
- The stock has a Price-to-Earnings (P/E) ratio of 14.74, which is clearly lower than the current S&P 500 average of about 27.7.
- Its Forward P/E ratio of 12.58 is also appealing compared to the market.
- Compared to its Media industry group, which often has high-valued tech and advertising names, The Trade Desk is less expensive than about 76% of companies based on its P/E ratio.
While a high PEG ratio shows the market is still valuing significant growth, the actual level of the P/E ratios, along with the company's quality (covered next), backs the view that this is not an overpriced growth company.
Supported by Profit and Financial Soundness
Strong growth at a fair price is much more maintainable when a company is also very profitable and financially stable, conditions important to the affordable growth method to steer clear of "value traps" or financially weak businesses. The Trade Desk does very well here, with Profit and Financial Soundness scores of 8 and 7, in that order.
- High Profit: The company has very good margins, with a Gross Margin of almost 79%, an Operating Margin above 18%, and a Profit Margin over 15%. These numbers put it in the top group of its field. Its Return on Invested Capital (ROIC) of 12.9% is much higher than its cost of capital, showing good use of investor money to create earnings.
- Strong Financial Base: A key part of its financial soundness is a clean balance sheet with no debt, removing interest cost risk and giving good flexibility. Its Altman-Z score of 3.39 points to a low short-term chance of financial trouble, and its liquidity ratios (Current and Quick Ratios of 1.71) are enough to cover near-term needs.
Conclusion
The Trade Desk shows the traits wanted in an affordable growth investment: very strong past growth with a believable way forward, all trading at a value that is reasonable compared to both the wider market and its own field. Importantly, this growth is backed by first-rate profit measures and a very strong balance sheet with no debt, reducing basic risk. For investors, this mix points to a company performing well in a strong ongoing trend without needing investors to pay a high price that allows for no mistakes.
Find More Affordable Growth Ideas
The Trade Desk was found using a specific filter for stocks with good growth, acceptable profit and soundness, and fair values. If this method fits your investment style, you can review a changing list of other stocks now meeting like conditions by using our Affordable Growth stock screener.
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 information given is based on supplied data and should not be the only reason for any investment choice. Investing has risk, including the possible loss of the original amount. Always do your own research and think about talking with a qualified financial advisor before making any investment decisions.
