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Buy These 5 Low-Leverage Stocks Amid Wall Street's Tricky July Start
Read MoreHide Full Article
Key Takeaways
NVS, ALG, MT, BILI and STRL offer low leverage with strong earnings growth prospects.
The stocks offer defensive positioning amid market uncertainty and regulatory shifts.
Each stock reflects a favorable Zacks Rank and VGM Score.
Wall Street ended the first day of July 2025 on a mixed note. While the S&P 500 and Nasdaq suffered a fall, the Dow Jones Industrial Average gained a little. The contrasting movement witnessed across the three major stock indices of the U.S. equity market was due to two opposing forces that impacted the market yesterday.
On the one hand, tech stocks, especially Tesla, tumbled owing to a renewed feud between President Donald Trump and Tesla CEO Elon Musk. The President accused Musk of benefiting excessively from electric vehicle (EV) subsidies, particularly targeting the $7,500 EV tax credit. On the other hand, the U.S. Senate's passage of President Trump's tax bill on July 1, aimed at stimulating economic growth, must have provided a boost to overall investor sentiment.
No doubt, amid this mixed background, investors may hesitate to commit to new stock investments. However, this might be a golden opportunity to invest in stocks that aren’t expensive but could offer a protective shield during turbulent times, thanks to their low leverage. Such stocks include Novartis (NVS - Free Report) , Alamo Group (ALG - Free Report) , Arcelor Mittal (MT - Free Report) , Bilibili (BILI - Free Report) and Sterling Infrastructure, Inc. (STRL - Free Report) .
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 second-quarter 2025 earnings season ahead of 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 16 stocks that made it through the screen.
Novartis: It has one of the strongest and broadest portfolios of varied drugs. On June 25, 2025, Novartis announced the successful completion of its Regulus Therapeutics acquisition. This buyout will enable NVS to take the next step in advancing the clinical development of a potential first-in-class medicine that can help treat patients suffering from autosomal dominant polycystic kidney disease, the most common genetic cause of renal failure worldwide.
The Zacks Consensus Estimate for NVS’ 2025 sales suggests an improvement of 7.3% 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.
Alamo Group: It is the largest domestic tank barge operator in the United States. On June 30, 2025, Alamo Group announced the completion of its acquisition of Ring-O-Matic, which is a leading provider of industrial vacuum excavation equipment. This should bolster ALG’s product portfolio with Ring-O-Matic’s trailer-mounted excavator and vacuum product offerings.
The Zacks Consensus Estimate for Alamo Group’s 2025 earnings suggests a year-over-year improvement of 7.2%. The stock delivered a solid earnings surprise of 13.73% in the last reported quarter. It currently holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ArcelorMittal: It is the world’s leading steel and mining company. On June 20, 2025, MT signed a sale and purchase agreement to sell its operations in Bosnia and Herzegovina. This should allow ArcelorMittal to focus on core, higher-growth geographies and potentially improve its overall financial performance.
MT boasts a solid long-term earnings growth rate of 49.8%. The stock holds a four-quarter average earnings surprise of 9.55%. It currently carries a Zacks Rank #2.
Bilibili: It provides online videos, live broadcasting and mobile games. On May 20, 2025, the company released its first-quarter 2025 results. Its revenues increased 24% year over year, while gross profit improved a solid 58%.
The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 12.1% from the 2024 actual. The Zacks Consensus Estimate for its 2025 earnings of 71 cents also suggests a massive improvement from the year-ago quarter’s reported loss figure of a penny. It currently sports a Zacks Rank #1.
Sterling Infrastructure: It operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions, principally in the United States. On June 17, 2025, STRL announced that it has signed a definitive agreement to purchase substantially all of the assets of Irving, TX-based CEC Facilities Group, LLC (“CEC”), a leading specialty electrical and mechanical contractor. This acquisition should significantly enhance Sterling Infrastructure’s service portfolio, expand its footprint into high-growth, mission-critical markets like semiconductors and data centers, and drive strong revenue growth.
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 Wall Street's Tricky July Start
Key Takeaways
Wall Street ended the first day of July 2025 on a mixed note. While the S&P 500 and Nasdaq suffered a fall, the Dow Jones Industrial Average gained a little. The contrasting movement witnessed across the three major stock indices of the U.S. equity market was due to two opposing forces that impacted the market yesterday.
On the one hand, tech stocks, especially Tesla, tumbled owing to a renewed feud between President Donald Trump and Tesla CEO Elon Musk. The President accused Musk of benefiting excessively from electric vehicle (EV) subsidies, particularly targeting the $7,500 EV tax credit. On the other hand, the U.S. Senate's passage of President Trump's tax bill on July 1, aimed at stimulating economic growth, must have provided a boost to overall investor sentiment.
No doubt, amid this mixed background, investors may hesitate to commit to new stock investments. However, this might be a golden opportunity to invest in stocks that aren’t expensive but could offer a protective shield during turbulent times, thanks to their low leverage. Such stocks include Novartis (NVS - Free Report) , Alamo Group (ALG - Free Report) , Arcelor Mittal (MT - Free Report) , Bilibili (BILI - Free Report) and Sterling Infrastructure, Inc. (STRL - Free Report) .
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 second-quarter 2025 earnings season ahead of 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 16 stocks that made it through the screen.
Novartis: It has one of the strongest and broadest portfolios of varied drugs. On June 25, 2025, Novartis announced the successful completion of its Regulus Therapeutics acquisition. This buyout will enable NVS to take the next step in advancing the clinical development of a potential first-in-class medicine that can help treat patients suffering from autosomal dominant polycystic kidney disease, the most common genetic cause of renal failure worldwide.
The Zacks Consensus Estimate for NVS’ 2025 sales suggests an improvement of 7.3% 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.
Alamo Group: It is the largest domestic tank barge operator in the United States. On June 30, 2025, Alamo Group announced the completion of its acquisition of Ring-O-Matic, which is a leading provider of industrial vacuum excavation equipment. This should bolster ALG’s product portfolio with Ring-O-Matic’s trailer-mounted excavator and vacuum product offerings.
The Zacks Consensus Estimate for Alamo Group’s 2025 earnings suggests a year-over-year improvement of 7.2%. The stock delivered a solid earnings surprise of 13.73% in the last reported quarter. It currently holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ArcelorMittal: It is the world’s leading steel and mining company. On June 20, 2025, MT signed a sale and purchase agreement to sell its operations in Bosnia and Herzegovina. This should allow ArcelorMittal to focus on core, higher-growth geographies and potentially improve its overall financial performance.
MT boasts a solid long-term earnings growth rate of 49.8%. The stock holds a four-quarter average earnings surprise of 9.55%. It currently carries a Zacks Rank #2.
Bilibili: It provides online videos, live broadcasting and mobile games. On May 20, 2025, the company released its first-quarter 2025 results. Its revenues increased 24% year over year, while gross profit improved a solid 58%.
The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 12.1% from the 2024 actual. The Zacks Consensus Estimate for its 2025 earnings of 71 cents also suggests a massive improvement from the year-ago quarter’s reported loss figure of a penny. It currently sports a Zacks Rank #1.
Sterling Infrastructure: It operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions, principally in the United States. On June 17, 2025, STRL announced that it has signed a definitive agreement to purchase substantially all of the assets of Irving, TX-based CEC Facilities Group, LLC (“CEC”), a leading specialty electrical and mechanical contractor. This acquisition should significantly enhance Sterling Infrastructure’s service portfolio, expand its footprint into high-growth, mission-critical markets like semiconductors and data centers, and drive strong revenue growth.
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.