5 Quality at a Reasonable Price (QARP) Stocks To Watch Right Now

Quality at a Reasonable Price (QARP) investing combines the best of both worlds — the safety of quality companies with the upside potential of reasonable valuations. It's the strategy Warren Buffett shifted to after learning from Philip Fisher, and it's how Terry Smith has delivered 14% annual returns for over a decade.

If you're interested in learning more about this style of investing, check out our detailed post here. If you want to dive right into the stock picks, here they are:

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5 QARP Stocks to Watch 

Let me share a few names currently meeting QARP criteria that I'm watching closely or already own.

1- Microsoft (NASDAQ: MSFT)

Microsoft remains a textbook QARP holding. ROIC consistently above 20%, growing cloud revenue at 30%+ annually, fortress balance sheet with more cash than debt. Trading at 30x forward earnings with 15% expected earnings growth gives it a PEG around 2.0 — not cheap in absolute terms, but reasonable for this level of quality.

The Azure cloud platform, Office 365 subscription revenue, and LinkedIn provide multiple durable growth drivers. I own it and have no plans to sell.

2- Visa (NYSE: V)

Visa generates very high returns on capital (often 20–30%+), network effects that create a near-monopoly in payment processing, minimal capital requirements, and consistent double-digit earnings growth. At 26x forward earnings with 12% growth expectations, the PEG is around 2.2.

Yes, that's above my 1.5 threshold, but Visa's quality and competitive position justify a slight premium. I'd add more aggressively if it pulled back to 23x earnings.

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3- Costco (NASDAQ: COST)

COST demonstrates how QARP works in retail — a notoriously difficult sector. ROIC in the high teens to around 20%, membership model that generates predictable revenue, and a business model that competitors struggle to replicate. Trading at 48x trailing earnings sounds expensive until you consider its 10% annual earnings growth and exceptional consistency.

I hold a small position but would increase on any pullback to 40x earnings.

4- UnitedHealth Group (NYSE: UNH)

UNH combines healthcare's defensive characteristics with growth from Optum's healthcare services business. ROIC around 9%, growing earnings at 13-15% annually, and trading at 18x forward earnings for a PEG of 1.2.

Healthcare faces regulatory risks, but UnitedHealth's scale and integration of insurance with healthcare services creates competitive advantages that smaller players can't match.

5- Adobe (NASDAQ: ADBE)

ADBE represents quality in software: subscription revenue model, dominant market position in creative software, ROIC in the high-20s, and consistent double-digit growth. After pulling back from 2021 highs, it now trades at 14x forward earnings with 12% growth for a PEG close to 1.0.  

Not the cheapest software name, but Adobe's moat in creative tools and expansion into marketing technology make it worth watching.

These aren't recommendations — they're examples of how to identify QARP candidates. Your specific picks will depend on when you're reading this and current market valuations.

💡 Finding QARP stocks requires constant monitoring of quality metrics and valuations. WallStreetZen's platform provides real-time data on profitability, growth, and valuation for thousands of stocks — helping you identify QARP opportunities before they're overvalued.

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