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5 Low-Leverage Stocks to Watch Ahead of a Possible September Rate Cut
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Key Takeaways
U.S. markets rose after Powell signaled a possible September rate cut, lifting investor optimism.
Low-leverage stocks like NatWest, Sterling, Luxfer, Evercore and Hillman are highlighted as safer bets.
Each pick shows recent earnings growth and holds a favorable Zacks Rank, boosting their investment appeal.
All major U.S. stock indices improved more than 1.5% on Aug. 22, 2025, following Federal Reserve Chair Jerome Powell’s latest hint at a possible cut in the nation’s interest rate next month. Resultantly, traders across the board reacted to this optimistically and thus Wall Street observed a decent hike.
This might encourage stakeholders to invest more in the stock market right now in the anticipation that market will move up more each day as we progress towards the upcoming September Fed-meet. However, considering the fact that the share market has lately been on edge, we recommend choosing safe-bet stocks stocks like NatWest Group ((NWG - Free Report) ), Sterling Infrastructure ((STRL - Free Report) ), Luxfer Holdings ((LXFR - Free Report) ), Evercore ((EVR - Free Report) ) and Hillman Solutions Corp. ((HLMN - Free Report) ) that are less leveraged and 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 almost in its last lap, 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 14 stocks that made it through the screen.
NatWest Group: It operates as a banking and financial services company. On Aug. 22, 2025, NatWest announced that it has joined the debt financing syndicate to fund the essential upgrades and tunnel replacements, ensuring continued water supply for the UK’s largest potable water aqueduct — Haweswater Aqueduct. As a Mandated Lead Arranger, NWG will provide £140 million in lending. This project further reinforced NatWest’s position as the UK’s leading bank for infrastructure financing.
The Zacks Consensus Estimate for NWG’s 2025 sales suggests an improvement of 20.1% from the 2024 reported figure. The company boasts a long-term (three-to-five years) earnings growth rate of 10.9%. 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 Aug. 4, 2025, STRL announced its second-quarter 2025 results. Its revenues improved 21% year over year, while its earnings per share surged a solid 40.8%.
The Zacks Consensus Estimate for STRL’s 2025 earnings suggests a year-over-year improvement of 45.9%. The stock boasts a four-quarter average earnings surprise of 12.1%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Luxfer Holdings: It is a materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders. On July 29, 2025, LXFR released its second-quarter 2025 results. Its adjusted net sales improved 5.8% year over year, while its adjusted earnings per share surged a solid 25%.
LXFR boasts a solid long-term earnings growth rate of 8%. The Zacks Consensus Estimate for Luxfer’s 2025 sales suggests a year-over-year improvement of 1.1%. It currently carries a Zacks Rank #2.
Evercore: It is a premier global independent investment banking advisory firm. On July 30, 2025, Evercore announced its second-quarter 2025 results. Its adjusted revenues improved 20.7% year over year, while its earnings surged 30.4%.
The Zacks Consensus Estimate for EVR’s 2025 sales indicates an improvement of 15.9% from the 2024 reported actuals. The Zacks Consensus Estimate for 2025 earnings also indicates an improvement of 31.7% from the 2024 reported figure. It currently carries a Zacks Rank #2.
Hillman Solutions: It is a leading provider of hardware-related products and solutions to retail markets in North America. On Aug. 5, 2025, Hillman Solutions announced its second-quarter 2025 results. Its sales improved a solid 6.2% year over year, while adjusted earnings per share grew 6.3%.
The Zacks Consensus Estimate for HLMN’s 2025 sales indicates an improvement of 6.6% from the 2024 reported actuals. The Zacks Consensus Estimate for 2025 earnings also indicates an improvement of 12.2% from the 2024 reported figure. It currently carries a Zacks Rank #2.
You can get the remaining nine 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
5 Low-Leverage Stocks to Watch Ahead of a Possible September Rate Cut
Key Takeaways
All major U.S. stock indices improved more than 1.5% on Aug. 22, 2025, following Federal Reserve Chair Jerome Powell’s latest hint at a possible cut in the nation’s interest rate next month. Resultantly, traders across the board reacted to this optimistically and thus Wall Street observed a decent hike.
This might encourage stakeholders to invest more in the stock market right now in the anticipation that market will move up more each day as we progress towards the upcoming September Fed-meet. However, considering the fact that the share market has lately been on edge, we recommend choosing safe-bet stocks stocks like NatWest Group ((NWG - Free Report) ), Sterling Infrastructure ((STRL - Free Report) ), Luxfer Holdings ((LXFR - Free Report) ), Evercore ((EVR - Free Report) ) and Hillman Solutions Corp. ((HLMN - Free Report) ) that are less leveraged and 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 almost in its last lap, 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 14 stocks that made it through the screen.
NatWest Group: It operates as a banking and financial services company. On Aug. 22, 2025, NatWest announced that it has joined the debt financing syndicate to fund the essential upgrades and tunnel replacements, ensuring continued water supply for the UK’s largest potable water aqueduct — Haweswater Aqueduct. As a Mandated Lead Arranger, NWG will provide £140 million in lending. This project further reinforced NatWest’s position as the UK’s leading bank for infrastructure financing.
The Zacks Consensus Estimate for NWG’s 2025 sales suggests an improvement of 20.1% from the 2024 reported figure. The company boasts a long-term (three-to-five years) earnings growth rate of 10.9%. 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 Aug. 4, 2025, STRL announced its second-quarter 2025 results. Its revenues improved 21% year over year, while its earnings per share surged a solid 40.8%.
The Zacks Consensus Estimate for STRL’s 2025 earnings suggests a year-over-year improvement of 45.9%. The stock boasts a four-quarter average earnings surprise of 12.1%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Luxfer Holdings: It is a materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders. On July 29, 2025, LXFR released its second-quarter 2025 results. Its adjusted net sales improved 5.8% year over year, while its adjusted earnings per share surged a solid 25%.
LXFR boasts a solid long-term earnings growth rate of 8%. The Zacks Consensus Estimate for Luxfer’s 2025 sales suggests a year-over-year improvement of 1.1%. It currently carries a Zacks Rank #2.
Evercore: It is a premier global independent investment banking advisory firm. On July 30, 2025, Evercore announced its second-quarter 2025 results. Its adjusted revenues improved 20.7% year over year, while its earnings surged 30.4%.
The Zacks Consensus Estimate for EVR’s 2025 sales indicates an improvement of 15.9% from the 2024 reported actuals. The Zacks Consensus Estimate for 2025 earnings also indicates an improvement of 31.7% from the 2024 reported figure. It currently carries a Zacks Rank #2.
Hillman Solutions: It is a leading provider of hardware-related products and solutions to retail markets in North America. On Aug. 5, 2025, Hillman Solutions announced its second-quarter 2025 results. Its sales improved a solid 6.2% year over year, while adjusted earnings per share grew 6.3%.
The Zacks Consensus Estimate for HLMN’s 2025 sales indicates an improvement of 6.6% from the 2024 reported actuals. The Zacks Consensus Estimate for 2025 earnings also indicates an improvement of 12.2% from the 2024 reported figure. It currently carries a Zacks Rank #2.
You can get the remaining nine 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.