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Each month we take a close look at an aspect of sector investing. This month, we are examining sector growth and valuation, which is often referred to as GARP investing, with GARP standing for Growth At a Reasonable Price. Investors hunting for GARP stocks that reasonably balance long-term growth prospects and current value characteristics might want to look at companies in the Financial, Materials, Energy, and Communication Services sectors. These are among the industry groups that are currently selling for PEGY (price/earnings)/(growth+yield) ratios at or below the S&P 500's ratio of 1.9. To generate the PEGY ratios, we use the P/E ratio for each sector based on forward earnings for the numerator. For the denominator, we average the growth rates for the past five years along with two years of forward estimates, this in order to achieve a smoother, less-volatile, earnings growth-rate trend. We then we add the current yield to approximate total return. As an example, the current S&P 500 P/E ratio is 21, the current yield is 1.2%, and the historical growth rate is 10%. The formula is 21/(1.2+10.0) = 1.9. Based on our analysis of growth rates and valuations, along with other factors, we have established our current over-weight sectors as Information Technology, Financial, Utilities, Healthcare and Industrial. Our only under-weight sector is Consumer Discretionary. Our market-weight sectors are Energy, Consumer Staples, Materials, Real Estate and Communication Services.

BHP is a global diversified miner mainly supplying iron ore and copper. The merger of BHP Limited and Billiton PLC created the present-day BHP Group. The dual-listed structure from the 2001 BHP and Billiton merger was collapsed in 2022. Major assets include Pilbara iron ore and Escondida copper. Onshore US oil and gas assets were sold in 2018, and the remaining Petroleum assets were spun off and merged with Woodside in 2022, with BHP vesting the Woodside shares it received to BHP shareholders. It purchased copper miner Oz Minerals in fiscal 2023 and half of the Vicuna copper joint venture in fiscal 2025. It is entering the potash market through the development of its Jansen project in Canada. However, due to low prices, BHP placed its nickel business on care and maintenance in 2024.

CF Industries is a leading producer and distributor of nitrogen, which is primarily used in fertilizers. The company operates nitrogen manufacturing plants primarily in North America. CF also produces nitrogen in the United Kingdom and holds a joint venture interest in a nitrogen production facility in Trinidad and Tobago. CF makes nitrogen primarily using low-cost US natural gas as its feedstock, making the company one of the lowest-cost nitrogen producers globally. It is also investing in carbon-free blue and green ammonia, which can be used as an alternative fuel to hydrogen or as a means to transport hydrogen.

Mosaic is one of the largest phosphate and potash producers in the world. The company's assets include phosphate rock mines in the US and potash mines in Canada. Mosaic also runs a large fertilizer distribution operation in Brazil through its Mosaic Fertilizantes business.