We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Buy These 5 Low-Leverage Stocks Amid Volatile Market Sentiment
Read MoreHide Full Article
The U.S. stock market showed mixed signals on May 29, with investors reacting to a combination of events. While NVIDIA’s strong quarterly results and a favorable ruling from the U.S. International Trade court against Trump-imposed tariffs supported gains on the Nasdaq and S&P 500, the Dow Jones slipped, weighed down by investor concerns over the broader economic outlook amid escalating geopolitical uncertainties.
Given such volatile market sentiment, prudent investors are expected to choose safe bet stocks like Novartis (NVS - Free Report) , ENGIE SA (ENGIY - Free Report) , MasTec (MTZ - Free Report) , Dorman Products (DORM - Free Report) and Sterling Infrastructure, Inc. (STRL - Free Report) to safeguard their portfolio from huge losses (in times of crisis). These stocks bear low leverage and, therefore, should be a safer option for investors if they don’t want to lose big in times of market turmoil.
Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock helps investors.
What’s the Significance of Low-Leverage Stocks?
In finance, leverage is a term used to denote the practice of borrowing capital by companies to run their operations smoothly and expand the same. Such borrowings are done through debt financing. But there remains an option for equity finance. This is probably due to the cheap and easy availability of debt over equity financing.
However, debt financing has its share of drawbacks. Particularly, it is desirable only as long as it successfully generates a higher rate of return compared to the interest rate. So, to avoid considerable losses in your portfolio, one should always avoid companies that resort to excessive debt financing.
The crux of safe investment lies in choosing a company that is not burdened with debt, as a debt-free stock is almost impossible to find.
The equity market can be volatile at times, and, as an investor, if you don’t want to lose big time, we suggest you invest in stocks that bear low leverage and are, hence, less risky.
To identify such stocks, historically, several leverage ratios have been developed to measure the amount of debt a company bears. The debt-to-equity ratio is one of the most common ratios.
Analyzing Debt/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 lower debt-to-equity ratio reflects improved solvency for a company.
With the first-quarter 2025 earnings season almost behind us, investors must be eyeing stocks that have exhibited solid earnings growth in the recent past.
But if a stock bears a high debt-to-equity ratio in times of economic downturn, its so-called booming earnings picture might turn into a nightmare.
The Winning Strategy
Considering the factors above, it is prudent to choose stocks with a low debt-to-equity ratio to ensure steady returns.
Yet, 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 factors.
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.
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 (Strong Buy) or 2 (Buy), offer the best upside potential.
Estimated One-Year EPS Growth F(1)/F(0) greater than 5: This shows earnings growth expectation.
Zacks Rank #1 or 2: Irrespective of market conditions, stocks with a Zacks Rank #1 or 2 have a proven history of success.
Excluding stocks that have a negative or a zero debt-to-equity ratio, here we present our five picks out of the nine stocks that made it through the screen.
Novartis: It has one of the strongest and broadest portfolios of varied drugs. On May 27, 2025, Novartis announced that it had launched a tender offer to acquire Regulus Therapeutics for $7.00 per share in cash plus a potential $7.00 contingent payment tied to a regulatory milestone, as part of a previously announced merger agreement. The move is likely to strengthen Novartis’s pipeline in RNA-targeted therapies, enhancing its long-term innovation and growth strategy.
The Zacks Consensus Estimate for NVS’ 2025 sales suggests an improvement of 7.1% from the 2024 reported figure. The company boasts a long-term (three-to-five years) earnings growth rate of 7.9%. It currently has a Zacks Rank #2.
ENGIE SA: It engages in the power, natural gas, and energy services businesses. On May 14, 2025, the company announced its first-quarter 2025 results. Its revenues grew 5.6% year over year in the first quarter. As of March 31, 2025, ENGIE has 8.5 GW of renewable and battery capacity under construction, representing more than 100 projects worldwide.
MasTec: It is a leading infrastructure construction company operating mainly throughout North America. On May 1, 2025, the company announced its first-quarter 2025 results. Its revenues increased 6% year over year, while adjusted EBITDA margin improved 6 basis points.
The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 11% from the 2024 actual. The Zacks Consensus Estimate for its 2025 earnings suggests a year-over-year improvement of 54.9%. It currently carries a Zacks Rank #2.
Dorman Products: It is a leading supplier of Dealer Exclusive replacement parts to the Automotive, Medium and Heavy Duty Aftermarkets. On May 29, Dorman Products announced the release of hundreds of new light-duty automotive repair solutions, including several aftermarket-first innovations across key vehicle systems. This product expansion not only boosts Dorman’s extensive 138,000-SKU catalog but also creates over 12 million new sales opportunities, reinforcing its market leadership and growth in the aftermarket parts industry.
The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 4.9% from the 2024 actual. The Zacks Consensus Estimate for its 2025 earnings suggests a year-over-year improvement of 9.7%. It currently has a Zacks Rank #2.
Sterling Infrastructure: It operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions, principally in the United States. On May 5, the company announced its first-quarter 2025 results. Its revenues increased 7% year over year, while adjusted earnings per share surged 29%.
STRL boasts a long-term earnings growth rate of 15%. The stock boasts an average earnings surprise of 11.54%. It currently carries a Zacks Rank #2.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your trading.
Further, you can also create your strategies and backtest them first before taking the investment plunge.
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.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
Buy These 5 Low-Leverage Stocks Amid Volatile Market Sentiment
The U.S. stock market showed mixed signals on May 29, with investors reacting to a combination of events. While NVIDIA’s strong quarterly results and a favorable ruling from the U.S. International Trade court against Trump-imposed tariffs supported gains on the Nasdaq and S&P 500, the Dow Jones slipped, weighed down by investor concerns over the broader economic outlook amid escalating geopolitical uncertainties.
Given such volatile market sentiment, prudent investors are expected to choose safe bet stocks like Novartis (NVS - Free Report) , ENGIE SA (ENGIY - Free Report) , MasTec (MTZ - Free Report) , Dorman Products (DORM - Free Report) and Sterling Infrastructure, Inc. (STRL - Free Report) to safeguard their portfolio from huge losses (in times of crisis). These stocks bear low leverage and, therefore, should be a safer option for investors if they don’t want to lose big in times of market turmoil.
Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock helps investors.
What’s the Significance of Low-Leverage Stocks?
In finance, leverage is a term used to denote the practice of borrowing capital by companies to run their operations smoothly and expand the same. Such borrowings are done through debt financing. But there remains an option for equity finance. This is probably due to the cheap and easy availability of debt over equity financing.
However, debt financing has its share of drawbacks. Particularly, it is desirable only as long as it successfully generates a higher rate of return compared to the interest rate. So, to avoid considerable losses in your portfolio, one should always avoid companies that resort to excessive debt financing.
The crux of safe investment lies in choosing a company that is not burdened with debt, as a debt-free stock is almost impossible to find.
The equity market can be volatile at times, and, as an investor, if you don’t want to lose big time, we suggest you invest in stocks that bear low leverage and are, hence, less risky.
To identify such stocks, historically, several leverage ratios have been developed to measure the amount of debt a company bears. The debt-to-equity ratio is one of the most common ratios.
Analyzing Debt/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 lower debt-to-equity ratio reflects improved solvency for a company.
With the first-quarter 2025 earnings season almost behind us, investors must be eyeing stocks that have exhibited solid earnings growth in the recent past.
But if a stock bears a high debt-to-equity ratio in times of economic downturn, its so-called booming earnings picture might turn into a nightmare.
The Winning Strategy
Considering the factors above, it is prudent to choose stocks with a low debt-to-equity ratio to ensure steady returns.
Yet, 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 factors.
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.
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 (Strong Buy) or 2 (Buy), offer the best upside potential.
Estimated One-Year EPS Growth F(1)/F(0) greater than 5: This shows earnings growth expectation.
Zacks Rank #1 or 2: Irrespective of market conditions, stocks with a Zacks Rank #1 or 2 have a proven history of success.
Excluding stocks that have a negative or a zero debt-to-equity ratio, here we present our five picks out of the nine stocks that made it through the screen.
Novartis: It has one of the strongest and broadest portfolios of varied drugs. On May 27, 2025, Novartis announced that it had launched a tender offer to acquire Regulus Therapeutics for $7.00 per share in cash plus a potential $7.00 contingent payment tied to a regulatory milestone, as part of a previously announced merger agreement. The move is likely to strengthen Novartis’s pipeline in RNA-targeted therapies, enhancing its long-term innovation and growth strategy.
The Zacks Consensus Estimate for NVS’ 2025 sales suggests an improvement of 7.1% from the 2024 reported figure. The company boasts a long-term (three-to-five years) earnings growth rate of 7.9%. It currently has a Zacks Rank #2.
ENGIE SA: It engages in the power, natural gas, and energy services businesses. On May 14, 2025, the company announced its first-quarter 2025 results. Its revenues grew 5.6% year over year in the first quarter. As of March 31, 2025, ENGIE has 8.5 GW of renewable and battery capacity under construction, representing more than 100 projects worldwide.
The Zacks Consensus Estimate for its 2025 earnings suggests a year-over-year improvement of 22.9%. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
MasTec: It is a leading infrastructure construction company operating mainly throughout North America. On May 1, 2025, the company announced its first-quarter 2025 results. Its revenues increased 6% year over year, while adjusted EBITDA margin improved 6 basis points.
The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 11% from the 2024 actual. The Zacks Consensus Estimate for its 2025 earnings suggests a year-over-year improvement of 54.9%. It currently carries a Zacks Rank #2.
Dorman Products: It is a leading supplier of Dealer Exclusive replacement parts to the Automotive, Medium and Heavy Duty Aftermarkets. On May 29, Dorman Products announced the release of hundreds of new light-duty automotive repair solutions, including several aftermarket-first innovations across key vehicle systems. This product expansion not only boosts Dorman’s extensive 138,000-SKU catalog but also creates over 12 million new sales opportunities, reinforcing its market leadership and growth in the aftermarket parts industry.
The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 4.9% from the 2024 actual. The Zacks Consensus Estimate for its 2025 earnings suggests a year-over-year improvement of 9.7%. It currently has a Zacks Rank #2.
Sterling Infrastructure: It operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions, principally in the United States. On May 5, the company announced its first-quarter 2025 results. Its revenues increased 7% year over year, while adjusted earnings per share surged 29%.
STRL boasts a long-term earnings growth rate of 15%. The stock boasts an average earnings surprise of 11.54%. It currently carries a Zacks Rank #2.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your trading.
Further, you can also create your strategies and backtest them first before taking the investment plunge.
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.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.