AI Just Flagged This Stock as a GARP 💎

Hello Investor,

This week’s premium drop is all about identifying durable growth stocks that aren’t trading at nosebleed valuations.

We asked AI to act as a disciplined GARP (Growth at a Reasonable Price) investor, evaluating whether a company has the quality, consistency, and valuation support to be a core building block in a long-term portfolio.

We ran it on AbbVie (ABBV) — and the results might make you take a second look.

🧱 AI-Powered GARP Insights: AbbVie (ABBV)

📈 1. Growth Quality

• AbbVie’s revenue growth is steady, not flashy — but highly recurring, especially in immunology and neuroscience.

• Margins are stable despite patent cliffs, thanks to rising sales of Rinvoq and Skyrizi.

• ROIC remains healthy (~13–15%), and management reinvests wisely in R&D and selective M&A.

💵 2. Valuation Sanity

• ABBV trades at ~12x forward earnings, well below peers like LLY or MRK.

• EV/EBITDA and PEG ratios are modest, reflecting realistic expectations.

• GARP Score: 8.5 / 10 — attractive valuation with a solid growth runway.

🛡 3. Competitive Positioning

• Wide moat from its IP portfolio, scale in immunology, and payer relationships.

• High switching costs in specialty pharma reduce competitive leakage.

• Its newer drugs have long patent lives and strong uptake trends.

📊 4. Earnings Consistency

• Free cash flow is strong and consistent ~$22B in trailing FCF.

• Low accruals and minimal reliance on accounting gimmicks.

• Dividend has been increased for 50 consecutive quarters — a sign of discipline.

🧱 5. Role in a GARP Portfolio

• Classification: 🛡 Defensive GARP — low beta, stable returns

• Portfolio Role: Core Brick — suitable for a 5–8% weight

• Complements growthier names by adding income, stability, and low correlation

🧨 6. Red Flags & Deal Breakers

• Debt remains elevated post-Allergan, but leverage ratio is trending down.

• Some exposure to U.S. drug pricing regulation risk.

• Risk Flag Color: 🟡 Yellow — watch leverage and political headlines

🧭 7. Final Quality + Price Matrix

ABBV lands firmly in the Buy quadrant — high quality, reasonable price.

✅ 8. Final Allocation Decision

• Recommended Allocation: 6% of a long-term portfolio

• Why: Stable cash flows, fair valuation, and pipeline upside

• What to Monitor: Skyrizi/Rinvoq growth, debt levels, U.S. pricing policy

🔓 Want to Analyze Any Stock Like This?

We’ve built a premium ChatGPT prompt that lets you plug in any ticker — and instantly get a valuation-disciplined, fundamentals-first analysis based on long-term investing principles.

📊 It’s like having a GARP portfolio manager on demand.

👉 Get the Full Prompt Here

Use it to:

• Find underappreciated compounders

• Stress test high-flyers for valuation risk

• Build a smarter, more balanced long-term portfolio

Best regards,
StocksTrades.AI Newsletter

Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.