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Buy These 5 Low-Leverage Stocks as Market Moves Up
Read MoreHide Full Article
Key Takeaways
FSS, JLL, NRIM, SAFRY and ENGIY are highlighted as low-leverage options in a volatile market.
Solid revenue outlook support these companies' appeal for steadier returns.
Each stock showed recent strength, from asset gains at NRIM to new projects at ENGIY.
Major U.S. stock indices ended Nov. 25, 2025, on a positive note, reflecting investors’ optimism amid growing expectations of a rate cut next month. Notably, there is an 83% probability of a quarter-percentage-point cut by the central bank in December, per the CME FedWatch tool, as cited in a CNBC report.
This might attract investors to stocks that have been rallying recently, based on the anticipation that once the rate cut actually occurs, these stocks could gain substantially. However, considering the recent volatility in the U.S. stock market, it may be prudent for investors to focus on safer stocks rather than high-growth ones.
To this end, we recommend companies such as Federal Signal Corp. (FSS - Free Report) , Jones Lang LaSalle (JLL - Free Report) , Northrip Bancorp (NRIM - Free Report) , Safran SA (SAFRY - Free Report) and Engie (ENGIY - Free Report) . These stocks carry low leverage and, therefore, may offer a safer option for investors seeking stability during periods of market turmoil.
Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock can help investors.
What’s the Significance of Low-Leverage Stocks?
In finance, leverage refers to the practice of borrowing capital to help companies run their operations smoothly and expand their business. 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. To avoid considerable losses in your portfolio, it is advisable to avoid companies that rely excessively on 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 want to avoid significant losses, we suggest focusing on stocks with low leverage, which are generally less risky.
To identify such stocks, several leverage ratios have historically been developed to measure the amount of debt a company carries. The debt-to-equity ratio is one of the most common of these 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 third-quarter 2025 earnings season almost in its last lap, investors should be eyeing stocks that have demonstrated solid earnings growth in recent periods.
However, if a stock carries a high debt-to-equity ratio during an economic downturn, its seemingly strong earnings could quickly 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 select stocks with the potential to provide steady returns, we have expanded our screening criteria to include additional 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 expectations.
Zacks Rank #1 or 2: Irrespective of market conditions, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) 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 21 stocks that made it through the screen.
Federal Signal: It is a leading global designer, manufacturer and supplier of products and total solutions that serve municipal, governmental, industrial and commercial customers. On Oct. 30, 2025, the company posted its third-quarter 2025 results. Its adjusted earnings per share (EPS) surged 30% year over year on 17% revenue growth.
The Zacks Consensus Estimate for FSS’ 2025 revenues suggests an improvement of 14.3% from the year-ago quarter’s level. The stock boasts a long-term (three-to-five years) earnings growth rate of 14%. It currently has a Zacks Rank #2.
Jones Lang LaSalle: It is a leading full-service real estate firm that provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. On Nov. 5, 2025, JLL announced third-quarter 2025 results. Its adjusted earnings per share surged 29% year over year, while its revenues went up 10% in local currency.
The Zacks Consensus Estimate for JLL’s 2025 sales suggests an improvement of 10.3% from the year-ago quarter’s level. The Zacks Consensus Estimate for its 2025 earnings implies an improvement of 22.2% from the year-ago quarter’s level. It currently has a Zacks Rank #2.
Northrip Bancorp.: It is a full-service commercial bank that provides a full range of personal and business banking services. On Oct. 22, 2025, the company released its third-quarter 2025 results. Its EPS soared 207.7% year over year, primarily due to gains from the sale of certain assets by Pacific Wealth Advisors, as well as increases in net interest income and purchased receivable income.
The Zacks Consensus Estimate for NRIM’s 2025 revenues suggests an improvement of 29.6% from the year-ago quarter’s level. The Zacks Consensus Estimate for 2025 earnings implies an improvement of 51.5% from the year-ago quarter’s level. It currently carries a Zacks Rank #2.
Safran: It is a high-technology company that produces aircraft, rocket engines, and propulsion systems. On Nov. 21, 2025, Safran announced that it has signed a partnership agreement with Calidus Holding Group to jointly develop a state-of-the-art aerial delivery capability for the UAE. The agreement will combine Calidus’ advanced industrial capabilities with Safran’s world-class expertise in personnel and aerial delivery parachute systems.
The Zacks Consensus Estimate for SAFRY’s 2025 sales suggests a year-over-year improvement of 39.9%. The stock boasts a long-term earnings growth rate of 20.5%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Engie: It engages in the power, natural gas, and energy services businesses. On Nov. 24, 2025, Engie announced that it has won its first Battery Energy Storage System (“BESS”) project in India with a capacity of 280 MW/560 MWh.
The Zacks Consensus Estimate for ENGIY’s 2025 earnings indicates an improvement of 30.7% from the prior-year reported actuals. It currently carries a Zacks Rank #2.
You can get the remaining stocks on this list by signing up now for your two-week free trial to the Research Wizard and start using this screen in your trading.
Further, you can 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 as Market Moves Up
Key Takeaways
Major U.S. stock indices ended Nov. 25, 2025, on a positive note, reflecting investors’ optimism amid growing expectations of a rate cut next month. Notably, there is an 83% probability of a quarter-percentage-point cut by the central bank in December, per the CME FedWatch tool, as cited in a CNBC report.
This might attract investors to stocks that have been rallying recently, based on the anticipation that once the rate cut actually occurs, these stocks could gain substantially. However, considering the recent volatility in the U.S. stock market, it may be prudent for investors to focus on safer stocks rather than high-growth ones.
To this end, we recommend companies such as Federal Signal Corp. (FSS - Free Report) , Jones Lang LaSalle (JLL - Free Report) , Northrip Bancorp (NRIM - Free Report) , Safran SA (SAFRY - Free Report) and Engie (ENGIY - Free Report) . These stocks carry low leverage and, therefore, may offer a safer option for investors seeking stability during periods of market turmoil.
Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock can help investors.
What’s the Significance of Low-Leverage Stocks?
In finance, leverage refers to the practice of borrowing capital to help companies run their operations smoothly and expand their business. 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. To avoid considerable losses in your portfolio, it is advisable to avoid companies that rely excessively on 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 want to avoid significant losses, we suggest focusing on stocks with low leverage, which are generally less risky.
To identify such stocks, several leverage ratios have historically been developed to measure the amount of debt a company carries. The debt-to-equity ratio is one of the most common of these 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 third-quarter 2025 earnings season almost in its last lap, investors should be eyeing stocks that have demonstrated solid earnings growth in recent periods.
However, if a stock carries a high debt-to-equity ratio during an economic downturn, its seemingly strong earnings could quickly 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 select stocks with the potential to provide steady returns, we have expanded our screening criteria to include additional 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 expectations.
Zacks Rank #1 or 2: Irrespective of market conditions, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) 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 21 stocks that made it through the screen.
Federal Signal: It is a leading global designer, manufacturer and supplier of products and total solutions that serve municipal, governmental, industrial and commercial customers. On Oct. 30, 2025, the company posted its third-quarter 2025 results. Its adjusted earnings per share (EPS) surged 30% year over year on 17% revenue growth.
The Zacks Consensus Estimate for FSS’ 2025 revenues suggests an improvement of 14.3% from the year-ago quarter’s level. The stock boasts a long-term (three-to-five years) earnings growth rate of 14%. It currently has a Zacks Rank #2.
Jones Lang LaSalle: It is a leading full-service real estate firm that provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. On Nov. 5, 2025, JLL announced third-quarter 2025 results. Its adjusted earnings per share surged 29% year over year, while its revenues went up 10% in local currency.
The Zacks Consensus Estimate for JLL’s 2025 sales suggests an improvement of 10.3% from the year-ago quarter’s level. The Zacks Consensus Estimate for its 2025 earnings implies an improvement of 22.2% from the year-ago quarter’s level. It currently has a Zacks Rank #2.
Northrip Bancorp.: It is a full-service commercial bank that provides a full range of personal and business banking services. On Oct. 22, 2025, the company released its third-quarter 2025 results. Its EPS soared 207.7% year over year, primarily due to gains from the sale of certain assets by Pacific Wealth Advisors, as well as increases in net interest income and purchased receivable income.
The Zacks Consensus Estimate for NRIM’s 2025 revenues suggests an improvement of 29.6% from the year-ago quarter’s level. The Zacks Consensus Estimate for 2025 earnings implies an improvement of 51.5% from the year-ago quarter’s level. It currently carries a Zacks Rank #2.
Safran: It is a high-technology company that produces aircraft, rocket engines, and propulsion systems. On Nov. 21, 2025, Safran announced that it has signed a partnership agreement with Calidus Holding Group to jointly develop a state-of-the-art aerial delivery capability for the UAE. The agreement will combine Calidus’ advanced industrial capabilities with Safran’s world-class expertise in personnel and aerial delivery parachute systems.
The Zacks Consensus Estimate for SAFRY’s 2025 sales suggests a year-over-year improvement of 39.9%. The stock boasts a long-term earnings growth rate of 20.5%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Engie: It engages in the power, natural gas, and energy services businesses. On Nov. 24, 2025, Engie announced that it has won its first Battery Energy Storage System (“BESS”) project in India with a capacity of 280 MW/560 MWh.
The Zacks Consensus Estimate for ENGIY’s 2025 earnings indicates an improvement of 30.7% from the prior-year reported actuals. It currently carries a Zacks Rank #2.
You can get the remaining stocks on this list by signing up now for your two-week free trial to the Research Wizard and start using this screen in your trading.
Further, you can 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 is available at: https://www.zacks.com/performance.