Peter Lynch
GARP
Peter Lynch managed the Fidelity Magellan Fund to a 29.2% annual return over 13 years. His approach combines growth investing with value discipline, seeking companies with strong earnings growth that trade at reasonable multiples relative to that growth. Lynch described six qualitative company categories and applied different questions to each; this quantitative adaptation does not infer those categories from financial-statement growth alone.
Methodology fidelity
Faithful adaptationSources reviewed 2026-08-24Lynch did not apply one seven-rule gate to every stock. He distinguished slow growers, stalwarts, fast growers, cyclicals, turnarounds, and asset plays, then emphasized different facts. The app does not claim to reproduce that qualitative classification: it reports only a descriptive EPS-growth bucket, or unknown when growth cannot be measured. Its PEG is the basic P/E-to-earnings-growth ratio and excludes dividends. The earnings-growth test passes any positive 3–5-year EPS CAGR, even outside the displayed fast-grower band. PEG, earnings growth, inventories, debt, and cash are source-backed; the ROE cutoff, proportional pass-count verdict, and capped PEG-derived fair value are app choices.
Valuation Method
Basic Earnings-Growth PEG Fair Value
Derived from published ruleApp-derived fair value that sets a capped fair P/E equal to the EPS growth rate and multiplies by current EPS. Dividends are excluded.
Screening implementation (7 criteria)
| # | Criterion | Metric | Threshold | Data Source |
|---|---|---|---|---|
| 1 | Basic Earnings-Growth PEG | P/E / EPS Growth Rate (dividends excluded) | < 1.0 (ideally < 0.5) | Market Price, EPS, 3-5 yr EPS growth rate |
| 2 | Earnings Growth Rate | 3-5 Year EPS CAGR | 15-30% app fast-grower band; any positive growth passes | Income Statement: EPS history |
| 3 | Debt/Equity | Total Debt / Equity | < 0.33 preferred | Balance Sheet |
| 4 | Free Cash Flow | FCF Positive | Yes, and growing | Cash Flow Statement |
| 5 | Inventory vs. Sales | Inventory Growth vs. Revenue Growth | Inventory growth < Revenue growth | Balance Sheet: Inventory; Income Statement: Revenue |
| 6 | Return on Equity | ROE | > 15% | Net Income / Equity |
| 7 | Net Cash Position | Cash - Long-term Debt | Positive preferred | Balance Sheet |
Intrinsic Value Method
Basic Earnings-Growth PEG Fair Value
Derived from published ruleEPS * EPS Growth Rate (dividends excluded; implied P/E capped at 25x)An app proxy that sets fair P/E equal to measured EPS growth, capped at 25x, then multiplies by current EPS. It excludes dividends and should not be read as Lynch’s dividend-adjusted PEG comparison.
Verdict Logic
No Lynch company category is inferred. BUY when at least 5/7 of applicable criteria pass (the same proportional bar after sector gates) and the basic earnings-growth PEG criterion passes. NEUTRAL when the pass-count bar is met but PEG does not pass. FAIL when the pass-count bar is missed.
What Would Peter Lynch Buy Today?
Sources
One Up on Wall Street
primary1989Peter Lynch
Lynch's classic guide for individual investors. Introduces the six company categories (Slow Grower, Stalwart, Fast Grower, Cyclical, Turnaround, Asset Play) and the PEG ratio as a primary valuation tool.
View source →Beating the Street
primary1993Peter Lynch
The follow-up to One Up on Wall Street. Provides detailed case studies of how Lynch applied his framework while managing the Magellan Fund, including the specific financial metrics he tracked.
View source →