Garmin (NYSE: GRMN), a leader in GPS-enabled navigation, communication, and information devices has been one of our favorite stocks for years. Since MarketGrader started covering the company in February 2004, almost 25 years ago, we have given it a ‘Buy’ or ‘Hold’ rating—based on our 24-factor ‘GARP + Quality’ analysis—86.4% of the time, which amounts to almost 8,000 days out of a little more than 9,000 days in which we have followed the stock. Our clients have been amply rewarded, with the stock multiplying nine-fold over that time. Our most recent upgrade, from ‘Hold’ to ‘Buy’ came on August 9, 2023, with the stock trading at $104 a share; it closed Friday (12/13) at $215.

So why choose to highlight the stock now?

While not inexpensive by any stretch, with the company’s shares trading at 29 times next year’s earnings per share and seven times sales, the company’s grades are rock solid across our four fundamental analysis categories: Growth, Value, Profitability, and Cash Flow. Each category is divided into six indicators, each of which receives an individual grade. All 24 grades are added up into a final score, between zero and 100, with any company scoring over 60 receiving a ‘Buy’ rating (only 5,800 companies out of 41,000 covered by MarketGrader are currently rated ‘Buy’). Garmin gets a StockGrade of 76.4, making it the second highest graded company in Switzerland (where it is domiciled), and one of the top 120 Technology stocks in the world (out of 6,450 companies in the sector tracked by MarketGrader). If the company were domiciled in the U.S., it would rank 37th out of almost 4,000 companies.

For a company that is a household name for millions of sports enthusiasts, boaters and pilots around the world, trailing 12-month revenue of $5.96 billion, for the period ended last September, seems modest and suggests the company has ample room for growth (by comparison, Apple reported almost $40 billion in revenue from its ‘wearables’ division in the last 12 months). Garmin’s year-over-year sales grew 24% last quarter, while trailing 12-month sales grew 18% from a year earlier and almost 21% in three years. While not growing at the pace of companies like Nvidia, Garmin has been growing steadily—and profitably—for over two decades. And its growth appears to be accelerating in recent quarters as the company continues to scale. Operating income jumped almost 62% last quarter, to $437 million, while net income grew more than 50% from a year earlier, to almost $400 million.

Garmin’s accelerating growth has not come at the expense of profits, as its gross margin expanded in the last 12 months to 58.4% from 57% a year earlier. Net profits account for 25% of total revenue. Both are higher than Apple, albeit on a much smaller revenue base. Garmin generated almost $1.3 billion in free cash flow in the last 12 months, 17% higher than a year earlier and more than four times what it generated just two years ago. Meanwhile the company has no net debt and sports a 20% return on equity and a 19% return on invested capital. Unsurprisingly, Garmin is one of MarketGrader’s top stocks in seven of our lists of long-term investment ideas, including Best Overall Grades, Best Large Caps, Increasing Dividends, Cash Kings, Best Growth Stocks and Growth Compounders. It is also a member of three MarketGrader Indexes.

Surging Sentiment

We complement our fundamentals-based StockGrade with a Sentiment Analysis that combines four scores based on momentum, price trend, relative strength, and earnings guidance. The resulting Sentiment score (on a 10-point scale) and Sentiment rating (Positive, Neutral, or Negative) is designed to complement our StockGrade and help long-term investors find good entry or exit points for long-term holdings they might be considering or where they might want to take a profit. It is also a useful tool to find ideas that might do well in the short term, which we define as 30 to 45 days ahead. And it is based on this analysis that Garmin caught our eye this week, especially as we head into the holiday buying season, which is always the company’s strongest period.

Garmin entered the busy holiday shopping period with a total Sentiment score of 9.3, which ranks it in the top 2% of almost 10,000 stocks in MarketGrader’s global database with a market cap of at least $1 billion. And while all our technical indicators for the stock are pointing upward, what’s most notable in our analysis is the fact that the consensus estimate for the company’s next fiscal year report has increased by more than 15% in the last three months. Today analysts polled by FactSet expect the company to report $7.67 in FY 2025 EPS compared to $6.65 three months ago and $6.30 six months ago. Absent a disastrous holiday season, this seems like a strong wind at the company’s back, which combined with superb fundamentals offers investors a healthy margin of safety. It is not often that you find excellent growth companies trading at a reasonable price that are also among the top sentiment-rated stocks in MarketGrader. Garmin is tops among them.