Growth at reasonable price (GARP) investment strategies aim to balance the tactics used by growth and value investors. This hybrid strategy offers significant advantages to portfolio diversification, as investors are able to identify stable growing companies which are selling at a discount to their intrinsic values.

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The general problem with large cap value plays like Exxon Mobil (NYSE:XOM) or Coca-Cola (NYSE:KO) is that these stocks will normally provide limited annual capital gains. On the other hand, high growth tech companies like Apple (Nasdaq:AAPL) and Netflix (Nasdaq:NFLX) are expected to continuously invent revolutionary products and increase their customer base, exposing investors to elevated levels of risk. GARP brings the two strategies together in an effort to minimize risk while maximizing potential upside.

Orbotech Overview
Orbotech (Nasdaq:ORBK) is a relatively small Israeli-based developer of specialized technologies, such as printed circuit boards and flat panel display systems. The final products, which use Orbotech equipment, include high-demand growth items such as tablets, 3D TVs and smartphones. Many of the firm's clients and business partners include established tech giants including Apple, Sony (NYSE:SNE), Samsung, and Sharp (OTCBB:SHCAY).

After trading at under $10 for most of the 1980s and '90s, ORBK exploded during the tech bubble to a share price of over $70, but now fluctuates around the $12.50 mark. Despite its volatile history, Orbotech supports strong fundamentals, making it a prime candidate for the GARP strategy.

Orbotech Value
With $191 million of cash on its balance sheet, ORBK carries approximately $5.45 of cash per share and has a net debt position of negative $74 million. Healthy liquidity ratios provide the company with level of safety that is not often found in the tech industry. Its current assets to total liabilities ratio is 1.87, and even if the entire cash position is removed from its balance sheet, the reduced current ratio would sit at 2.22 Orbotech has been around for 30 years, and its successful continuous operations minimize the need to rely on external debt financing.

Orbotech Growth Opportunities
In the first reporting quarter, Orbotech saw its revenues increase by 34% to $134.2 million, while operating margins also improved by 430 basis points. As a result, diluted income from continuing operations surged from 10 to 30 cents. Net cash provided by operating cash flows also showed an impressive spike of 460% to 8.72 million. Second-quarter revenues are expected to range between $150-$160 million, and management forecasts full-year net income margins to improve further to 12.5%.

In 2000, Orbotech generated solid revenues of $372 million and net income of $79 million, which was fully reflected in its $73 share price. In 2001 when yearly revenues were $302 million and its profit margin stood at only 0.7%, the price of ORBK hit $50; expected revenues for fiscal 2011 will be approximately $570 million, but the shares are still trading at a fraction of its 2001 highs. Given that the tech bubble is a poor period of comparison, despite its strong year-over-year performance Orbotech it trading at practically the same levels as last year.

The Bottom Line
During the second quarter of 2011, Orbotech's subsidiary Orbotech LT Solar, LLC received its first order for its new photovoltaic system. As the company continues to focus on innovation while sustaining it pristine financial position, Orbotech, currently trading with a low P/E of 10, is an ideal investment for the GARP strategy. (These five qualitative measures allow investors to draw conclusions about a corporation that are not apparent on the balance sheet. See Using Porter's 5 Forces To Analyze Stocks.)

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