If you're looking for an attractive growth stock in this expensive market, consider Garmin (GRMN 0.39%) for your next purchase. Sure, the tech giant's shares have rallied since early 2023, and the stock's valuation is near a 10-year high. Yet Garmin has earned its premium valuation, which doesn't preclude excellent returns from here.

Let's take a closer look at why the GPS device stock deserves a spot at the top of your watchlist.

Garmin had a great year

Garmin just wrapped up a phenomenal fiscal 2024. The company revealed in mid-February that operating income rose to $1.6 billion from $1.1 billion, pushing the operating profit margin to 25% of sales, up from 21% of sales in 2023. Revenue growth was also impressive, despite cautious consumer spending, as net sales jumped 20% thanks to gains in each of Garmin's main product categories. The fitness division stood out with a 32% revenue spike for the year, while its aviation unit was the worst performer with a 4% uptick.

The fact that innovation was the engine behind these gains, as opposed to price increases, bodes well for Garmin's continued growth. So does the company's diverse product mix, which spans consumer devices such as fitness trackers and smartwatches, along with both aviation and boat navigation platforms. Management sees room for another year of sales gains ahead. "We are entering 2025 with continued strong momentum from our robust product lineup," CEO Cliff Pemble told investors on Feb. 19.

Cash and dividends

Garmin stock will appeal to investors who like cash-rich businesses. The company generated over $1 billion of free cash flow for the second straight year in 2024. Garmin entered 2025 with $3.7 billion of cash and securities.

GRMN Cash from Operations (TTM) data by YCharts

Those cash holdings will easily cover the company's quarterly dividend payment, which rose to $0.90 per share from $0.75 per share in 2024. Garmin has plenty of resources it can use to extend its lead in the high-end smartwatch category, and there's a good chance shareholders will see increasing cash returns through both a rising dividend and higher stock buyback spending.

Worth the price?

Garmin stock is priced at 31 times the past year's earnings and 7 times sales. Those valuations are both near the record highs investors saw during the height of the pandemic rally in late 2022, raising the risk you'll overpay for this successful business.

But the stock is a bargain next to industry leader Apple, which is priced at 39 times revenue and 10 times sales. Garmin lacks Apple's scale, brand strength, and predictable services revenue. But the GPS device maker is growing more quickly, and its 25% operating profit margin isn't far from Apple's 32% level.

Cautious investors might want to watch the growth stock for a chance to snatch up shares at a cheaper price. That's possible given the 20%-plus rally in the market in each of the past two years. But Garmin should deliver great returns, as long as the company keeps up its streak of innovative product releases. The past several years of operating results demonstrate that Garmin can gain market share while boosting profit margin and rewarding shareholders with increasing dividends and stock buybacks. Smart investors know that's a recipe for excellent long-term returns.