For Immediate Release
Chicago, IL –August 22, 2017 - Stocks in this week’s article include Big Lots, Inc. (NYSE:BIG – Free Report), Honda Motor Company, Ltd. (NYSE:HMC – Free Report), EMCOR Group, Inc. (NYSE:EME – Free Report), Manulife Financial Corp (NYSE:MFC – Free Report) and Deutsche Post AG (OTCMKTS:DPSGY – Free Report).
Buy These 5 Low-Leverage Stocks for Portfolio Safety
Leverage, better known as financial leverage, refers to the use of debt financing by corporations to boost its business. Although companies have the option to resort to equity financing, debt financing is a more frequently chosen option. This is because equity financing is more costly.
Naturally debt financing is a well practiced business strategy among majority of the companies in the stock market. However, uncertainty can hit the global market anytime.
In fact, if we consider the current scenario, the picture is not a very bright one. U.S. stocks took a dip last week with the S&P 500 index recording its biggest one-day fall on Thursday since May.
This temporarily marred positive sentiments in the market, courtesy of the nation’s improving macroeconomic indicators under President Trump’s reign. Nevertheless, investing in the stock market hardly backfires provided one is cautious.
Usually, companies with a lower level of debt are considered safe bets. This is because highly leveraged stocks are vulnerable in times of volatility.
So the crux of safe investment lies in identifying low leveraged stocks. Using financial leverage ratio, one can easily determine low-leveraged stocks. One of the most popular leverage ratios is debt-to-equity ratio.
Analyzing Debt-to-Equity
Debt-to-Equity Ratio = Total Liabilities/Shareholders’ Equity
This metric is a liquidity ratio that indicates the amount of financial risk a company bears. A company with a lower debt-to-equity ratio implies that it has a more or less financially stable business, thereby making it a more worthy investment opportunity.
With the second-quarter earnings season nearing its end, investors must be gearing up for investing in growth stocks. However, blindly pursuing high earnings yielding stocks might be a drain on your resources if these have a high debt-to-equity ratio.
This is because a high debt-to-equity ratio indicates a huge level of repayment that the company has to make in connection with the large debt amount, which had once boosted its earnings growth. This makes the company’s so-called solid earnings very volatile.
Therefore to avoid losses, it is wise to go for stocks bearing low debt-to-equity ratio.
The Winning Strategy
Given the fact that uncertainty can hit the global market anytime, choosing low leverage stocks is considered a safe strategy.
However, an investment strategy based solely on the debt-to-equity ratio might not fetch the desired outcome. To choose stocks that have the potential to give you steady returns, we have expanded our screening criteria to include some other criteria, as discussed below.
Here are the other parameters:
Debt/Equity less than X-Industry Median: Stocks that are less leveraged than their industry peers.
Current Price greater than or equal to 10: The stocks must be trading at a minimum of $10 or above.
Average 20-day Volume greater than or equal to 50000: A substantial trading volume ensures that the stock is easily tradable.
Percentage Change in EPS F(0)/F(-1) greater than X-Industry Median: Earnings growth adds to optimism, leading to a stock’s price appreciation.
Estimated One-Year EPS Growth F(1)/F(0) greater than 5: This shows earnings growth expectation.
Zacks Rank #1 (Strong Buy) or #2 (Buy): No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 or 2 have a proven history of success.
VGM Score of A or B: Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 offer the best upside potential.
Excluding stocks that have a negative or a zero debt-to-equity ratio, here are five of the 21 stocks that made it through the screen.
Big Lots, Inc. (NYSE:BIG – Free Report): It is one of the leading value retailers specializing in closeout merchandise and toys. The company carries a Zacks Rank #2 and has delivered an average positive earnings surprise of 82.98% in the trailing four quarters.
Honda Motor Company, Ltd. (NYSE:HMC – Free Report): This company manufactures a wide range of products, including motorcycles, ATVs, generators, marine engines, lawn and garden equipment and automobiles. It carries a Zacks Rank # 1 and came up with an average positive earnings surprise of 69.20% in the trailing four quarters.
EMCOR Group, Inc. (NYSE:EME – Free Report): This corporation is engaged in design, integration, installation, start-up, testing, operation and maintenance of complex mechanical and electrical systems. It delivered an average positive earnings surprise of 11.69% in the trailing four quarters and carries a Zacks Rank #2. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Manulife Financial Corp (NYSE:MFC – Free Report): It is engaged in providing financial protection products and investment management services. The company carries a Zacks Rank #1 and came up with an average positive earnings surprise of 11.08% in the trailing four quarters.
Deutsche Post AG (OTCMKTS:DPSGY – Free Report): It provides logistics services primarily in Germany, Europe, America, Asia Pacific and Other regions. The company carries a Zacks Rank #2 and came up with an average positive earnings surprise of 9.55% in the trailing four quarters.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
Get the full Report on BIG - FREE
Get the full Report on HMC - FREE
Get the full Report on EME - FREE
Get the full Report on MFC - FREE
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Follow us on Twitter: https://twitter.com/zacksresearch
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Image: Bigstock
Zacks.com featured highlights: Big Lots, Honda Motor, EMCOR Group, Manulife Financial and Deutsche Post
For Immediate Release
Chicago, IL –August 22, 2017 - Stocks in this week’s article include Big Lots, Inc. (NYSE:BIG – Free Report), Honda Motor Company, Ltd. (NYSE:HMC – Free Report), EMCOR Group, Inc. (NYSE:EME – Free Report), Manulife Financial Corp (NYSE:MFC – Free Report) and Deutsche Post AG (OTCMKTS:DPSGY – Free Report).
Buy These 5 Low-Leverage Stocks for Portfolio Safety
Leverage, better known as financial leverage, refers to the use of debt financing by corporations to boost its business. Although companies have the option to resort to equity financing, debt financing is a more frequently chosen option. This is because equity financing is more costly.
Naturally debt financing is a well practiced business strategy among majority of the companies in the stock market. However, uncertainty can hit the global market anytime.
In fact, if we consider the current scenario, the picture is not a very bright one. U.S. stocks took a dip last week with the S&P 500 index recording its biggest one-day fall on Thursday since May.
This temporarily marred positive sentiments in the market, courtesy of the nation’s improving macroeconomic indicators under President Trump’s reign. Nevertheless, investing in the stock market hardly backfires provided one is cautious.
Usually, companies with a lower level of debt are considered safe bets. This is because highly leveraged stocks are vulnerable in times of volatility.
So the crux of safe investment lies in identifying low leveraged stocks. Using financial leverage ratio, one can easily determine low-leveraged stocks. One of the most popular leverage ratios is debt-to-equity ratio.
Analyzing Debt-to-Equity
Debt-to-Equity Ratio = Total Liabilities/Shareholders’ Equity
This metric is a liquidity ratio that indicates the amount of financial risk a company bears. A company with a lower debt-to-equity ratio implies that it has a more or less financially stable business, thereby making it a more worthy investment opportunity.
With the second-quarter earnings season nearing its end, investors must be gearing up for investing in growth stocks. However, blindly pursuing high earnings yielding stocks might be a drain on your resources if these have a high debt-to-equity ratio.
This is because a high debt-to-equity ratio indicates a huge level of repayment that the company has to make in connection with the large debt amount, which had once boosted its earnings growth. This makes the company’s so-called solid earnings very volatile.
Therefore to avoid losses, it is wise to go for stocks bearing low debt-to-equity ratio.
The Winning Strategy
Given the fact that uncertainty can hit the global market anytime, choosing low leverage stocks is considered a safe strategy.
However, an investment strategy based solely on the debt-to-equity ratio might not fetch the desired outcome. To choose stocks that have the potential to give you steady returns, we have expanded our screening criteria to include some other criteria, as discussed below.
Here are the other parameters:
Debt/Equity less than X-Industry Median: Stocks that are less leveraged than their industry peers.
Current Price greater than or equal to 10: The stocks must be trading at a minimum of $10 or above.
Average 20-day Volume greater than or equal to 50000: A substantial trading volume ensures that the stock is easily tradable.
Percentage Change in EPS F(0)/F(-1) greater than X-Industry Median: Earnings growth adds to optimism, leading to a stock’s price appreciation.
Estimated One-Year EPS Growth F(1)/F(0) greater than 5: This shows earnings growth expectation.
Zacks Rank #1 (Strong Buy) or #2 (Buy): No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 or 2 have a proven history of success.
VGM Score of A or B: Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 offer the best upside potential.
Excluding stocks that have a negative or a zero debt-to-equity ratio, here are five of the 21 stocks that made it through the screen.
Big Lots, Inc. (NYSE:BIG – Free Report): It is one of the leading value retailers specializing in closeout merchandise and toys. The company carries a Zacks Rank #2 and has delivered an average positive earnings surprise of 82.98% in the trailing four quarters.
Honda Motor Company, Ltd. (NYSE:HMC – Free Report): This company manufactures a wide range of products, including motorcycles, ATVs, generators, marine engines, lawn and garden equipment and automobiles. It carries a Zacks Rank # 1 and came up with an average positive earnings surprise of 69.20% in the trailing four quarters.
EMCOR Group, Inc. (NYSE:EME – Free Report): This corporation is engaged in design, integration, installation, start-up, testing, operation and maintenance of complex mechanical and electrical systems. It delivered an average positive earnings surprise of 11.69% in the trailing four quarters and carries a Zacks Rank #2. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Manulife Financial Corp (NYSE:MFC – Free Report): It is engaged in providing financial protection products and investment management services. The company carries a Zacks Rank #1 and came up with an average positive earnings surprise of 11.08% in the trailing four quarters.
Deutsche Post AG (OTCMKTS:DPSGY – Free Report): It provides logistics services primarily in Germany, Europe, America, Asia Pacific and Other regions. The company carries a Zacks Rank #2 and came up with an average positive earnings surprise of 9.55% in the trailing four quarters.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
Get the full Report on BIG - FREE
Get the full Report on HMC - FREE
Get the full Report on EME - FREE
Get the full Report on MFC - FREE
Get the full Report on DPSGY - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.