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Each stock holds a Zacks Rank #2 and shows strong earnings growth with manageable debt profiles.
All three major stock indices in the U.S. equity market recorded a rise on July 17, 2025, buoyed by several growth drivers. While U.S. retail sales data reflected a rebound in June—with sales rising 0.6% after a 0.9% decline in May and surpassing market expectations—labor data, on the other hand, showed a decline in U.S. unemployment claims.
Better-than-expected earnings results from big tech stocks like Netflix also boosted investors’ confidence and, in turn, Wall Street’s performance yesterday.
Against this backdrop, stakeholders might be in the mood for investing more in U.S. stocks. However, since the share market has lately been on edge, we recommend choosing stocks like Novartis (NVS - Free Report) , ResMed Inc. (RMD - Free Report) , Wabtec (WAB - Free Report) , Elbit Systems (ESLT - Free Report) and Ingredion Inc. (INGR - Free Report) that are less leveraged and are thus likely to provide a protective cushion against a sudden economic crisis.
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 them. 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 knocking on the door, 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 July 17, 2025, the company announced its second-quarter 2025 results. Its net sales grew 12% year over year, while earnings per share improved 29%.
The Zacks Consensus Estimate for NVS’ 2025 sales suggests an improvement of 9.3% from the 2024 reported figure. The company boasts a long-term (three-to-five years) earnings growth rate of 15.30%. It currently has a Zacks Rank #2.
ResMed: It is a designer, manufacturer and distributor in the worldwide market for generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. On July 1, 2025, ResMed announced that it plans to release its fourth-quarter fiscal 2025 results on July 31, 2025. To this end, the Zacks Consensus Estimate for RMD’s fiscal fourth-quarter sales suggests a year-over-year increase of 8.1%, while the consensus mark for its quarterly earnings has improved by 2 cents over the last 90 days.
The Zacks Consensus Estimate for ResMed’s fiscal 2026 earnings suggests a year-over-year improvement of 7.5%. The stock boasts a long-term earnings growth rate of 15.3%. It currently holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Wabtec: It provides value-added, technology-based locomotives, equipment, systems and services for the freight rail and passenger transit industries, as well as in the mining, marine and industrial markets, across the globe. On July 10, 2025, Wabtec announced an agreement with Intermodal Telematics (“IMT”) for expanding the exclusive distribution rights to include the European market. This agreement makes Wabtec the exclusive distributor of IMT's telematics solutions for railcars in the major European freight markets.
WAB boasts a solid long-term earnings growth rate of 16%. The Zacks Consensus Estimate for Wabtec’s 2025 sales suggests a year-over-year improvement of 5.3%. It currently carries a Zacks Rank #2.
Elbit Systems: It is a major supplier to the U.S Army and U.S. Marine Corps of Night Vision Head-Up Display systems for use in various types of helicopters. On June 12, 2025, Elbit Systems launched PAWS-2 (HR), a next-generation infrared missile warning system for fighter aircraft. It provides advanced protection for fighter jets, transport aircraft, and helicopters operating in complex and high-threat environments.
The Zacks Consensus Estimate for 2025 sales indicates an improvement of 13.8% from the 2024 actual. The stock boasts a four-quarter average earnings surprise of 21.12%. It currently holds a Zacks Rank #2.
Ingredion: It is an ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. On June 18, 2025, an expansion of the partnership between Ingredion and Univar Solutions Belgium N.V.’s Univar Solutions business was announced to distribute in the Benelux region. Effective Oct. 1, 2025, the distribution expansion will bring a wide range of plant-based and clean label products, including the innovative Novation range of functional native starches, plant-based proteins, and a comprehensive portfolio of stevia sweeteners developed by PureCircle by Ingredion, to meet growing consumer demand for clean label ingredients and sugar reduction.
INGR boasts a long-term earnings growth rate of 11%. The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 1% from the 2024 actual. 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 Impressive Retail Sales Data
Key Takeaways
All three major stock indices in the U.S. equity market recorded a rise on July 17, 2025, buoyed by several growth drivers. While U.S. retail sales data reflected a rebound in June—with sales rising 0.6% after a 0.9% decline in May and surpassing market expectations—labor data, on the other hand, showed a decline in U.S. unemployment claims.
Better-than-expected earnings results from big tech stocks like Netflix also boosted investors’ confidence and, in turn, Wall Street’s performance yesterday.
Against this backdrop, stakeholders might be in the mood for investing more in U.S. stocks. However, since the share market has lately been on edge, we recommend choosing stocks like Novartis (NVS - Free Report) , ResMed Inc. (RMD - Free Report) , Wabtec (WAB - Free Report) , Elbit Systems (ESLT - Free Report) and Ingredion Inc. (INGR - Free Report) that are less leveraged and are thus likely to provide a protective cushion against a sudden economic crisis.
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 them. 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 knocking on the door, 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 July 17, 2025, the company announced its second-quarter 2025 results. Its net sales grew 12% year over year, while earnings per share improved 29%.
The Zacks Consensus Estimate for NVS’ 2025 sales suggests an improvement of 9.3% from the 2024 reported figure. The company boasts a long-term (three-to-five years) earnings growth rate of 15.30%. It currently has a Zacks Rank #2.
ResMed: It is a designer, manufacturer and distributor in the worldwide market for generators, masks, and related accessories for the treatment of sleep-disordered breathing (SDB) and other respiratory disorders. On July 1, 2025, ResMed announced that it plans to release its fourth-quarter fiscal 2025 results on July 31, 2025. To this end, the Zacks Consensus Estimate for RMD’s fiscal fourth-quarter sales suggests a year-over-year increase of 8.1%, while the consensus mark for its quarterly earnings has improved by 2 cents over the last 90 days.
The Zacks Consensus Estimate for ResMed’s fiscal 2026 earnings suggests a year-over-year improvement of 7.5%. The stock boasts a long-term earnings growth rate of 15.3%. It currently holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Wabtec: It provides value-added, technology-based locomotives, equipment, systems and services for the freight rail and passenger transit industries, as well as in the mining, marine and industrial markets, across the globe. On July 10, 2025, Wabtec announced an agreement with Intermodal Telematics (“IMT”) for expanding the exclusive distribution rights to include the European market. This agreement makes Wabtec the exclusive distributor of IMT's telematics solutions for railcars in the major European freight markets.
WAB boasts a solid long-term earnings growth rate of 16%. The Zacks Consensus Estimate for Wabtec’s 2025 sales suggests a year-over-year improvement of 5.3%. It currently carries a Zacks Rank #2.
Elbit Systems: It is a major supplier to the U.S Army and U.S. Marine Corps of Night Vision Head-Up Display systems for use in various types of helicopters. On June 12, 2025, Elbit Systems launched PAWS-2 (HR), a next-generation infrared missile warning system for fighter aircraft. It provides advanced protection for fighter jets, transport aircraft, and helicopters operating in complex and high-threat environments.
The Zacks Consensus Estimate for 2025 sales indicates an improvement of 13.8% from the 2024 actual. The stock boasts a four-quarter average earnings surprise of 21.12%. It currently holds a Zacks Rank #2.
Ingredion: It is an ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. On June 18, 2025, an expansion of the partnership between Ingredion and Univar Solutions Belgium N.V.’s Univar Solutions business was announced to distribute in the Benelux region. Effective Oct. 1, 2025, the distribution expansion will bring a wide range of plant-based and clean label products, including the innovative Novation range of functional native starches, plant-based proteins, and a comprehensive portfolio of stevia sweeteners developed by PureCircle by Ingredion, to meet growing consumer demand for clean label ingredients and sugar reduction.
INGR boasts a long-term earnings growth rate of 11%. The Zacks Consensus Estimate for its 2025 sales indicates an improvement of 1% from the 2024 actual. 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.