What is Peter Lynch's investing strategy?

Lynch's Growth-At-a-Reasonable-Price (GARP) framework looks for earnings growth above 15%, PEG ratio below 1.0 (P/E divided by growth rate), positive free cash flow, and manageable debt. Lynch ran Fidelity's Magellan Fund from 1977 to 1990 and returned 29% annualized: the highest sustained mutual-fund performance in modern history.

What is the PEG ratio and why does Lynch use it?

PEG = P/E divided by earnings growth rate. A PEG of 1.0 means the market is paying exactly the growth rate (20× P/E for 20% growth). Below 1.0 = growth is cheaper than the price implies. Lynch uses PEG instead of raw P/E because high-growth businesses look 'expensive' on P/E alone but reasonable on PEG.

How does Lynch differ from Buffett?

Lynch is faster and more aggressive. He'd own 1,400 stocks at peak; Buffett owns 40 in concentrated positions. Lynch accepts shorter holding periods and higher portfolio turnover. Both demand quality, but Lynch's bar is 'reasonable growth at a reasonable price' while Buffett's is 'exceptional business at any price you can stomach.'

What returns did Lynch achieve?

29% annualized over 13 years running Fidelity's Magellan Fund (1977–1990), meaning $1,000 invested at the start became $28,000 at his retirement. He grew Magellan from $18M to $14B AUM in the same window. No mutual fund has matched that record since.

Growth at a reasonable price (GARP)

Peter Lynch's Investing Strategy

Peter Lynch ran Fidelity's Magellan Fund from 1977 to 1990, returning 29% annualized. His Growth-At-a-Reasonable-Price (GARP) framework adapted Graham for growth investors.

Last reviewed: January 1, 2026

The framework, in plain English

PEG ratio ≤ 1.0, price-to-earnings divided by growth rate.
EPS CAGR ≥ 15% over 5 years.
Revenue growth ≥ 10% annually.
Positive net margin (the business actually makes money).
Manageable debt: D/E < 1.
Free cash flow positive (cash earnings, not just accounting earnings).

From One Up On Wall Street (Lynch, 1989) and Beating the Street.

Top 10 stocks scoring high on Peter Lynch

See all Peter Lynch-fit stocks

Other investing frameworks

Warren Buffett

Wonderful businesses at fair prices

See all Warren Buffett-fit stocks

Benjamin Graham

Defensive deep-value investing

See all Benjamin Graham-fit stocks

Philip Fisher

Growth-quality with qualitative scuttlebutt

See all Philip Fisher-fit stocks

Joel Greenblatt

Magic Formula: high return on capital at a cheap EV/EBIT

See all Joel Greenblatt-fit stocks

Charlie Munger

Wonderful businesses, willing to pay up

See all Charlie Munger-fit stocks

Terry Smith

Modern compounder framework (Fundsmith)

See all Terry Smith-fit stocks

#1	FTAI	100/100	Strong GARP candidate: growth at a reasonable price.
#2	FTAIN	100/100	Strong GARP candidate - growth at a reasonable price.
#3	FTAIM	100/100	Strong GARP candidate: growth at a reasonable price.
#4	2282.HK	100/100	Strong GARP candidate: growth at a reasonable price.
#5	IVR	100/100	Strong GARP candidate - growth at a reasonable price.
#6	SNWV	100/100	Strong GARP candidate: growth at a reasonable price.
#7	PME.AX	100/100	Strong GARP candidate: growth at a reasonable price.
#8	WLFC	100/100	Strong GARP candidate: growth at a reasonable price.
#9	RCL	99/100	Strong GARP candidate: growth at a reasonable price.
#10	RPEL.BO	99/100	Strong GARP candidate: growth at a reasonable price.

#1	FTAI	100/100	Strong GARP candidate: growth at a reasonable price.
#2	FTAIN	100/100	Strong GARP candidate - growth at a reasonable price.
#3	FTAIM	100/100	Strong GARP candidate: growth at a reasonable price.
#4	2282.HK	100/100	Strong GARP candidate: growth at a reasonable price.
#5	IVR	100/100	Strong GARP candidate - growth at a reasonable price.
#6	SNWV	100/100	Strong GARP candidate: growth at a reasonable price.
#7	PME.AX	100/100	Strong GARP candidate: growth at a reasonable price.
#8	WLFC	100/100	Strong GARP candidate: growth at a reasonable price.
#9	RCL	99/100	Strong GARP candidate: growth at a reasonable price.
#10	RPEL.BO	99/100	Strong GARP candidate: growth at a reasonable price.