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Buy 5 Low-Leverage Stocks as Hope Fades for End to US-Iran Conflict
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Key Takeaways
PLOW posted 19.7% sales growth and a 300% jump in adjusted EPS in first-quarter 2026.
ESLT opened a new UAS facility in Romania, expanding its European defense footprint.
KEX reported 7.4% revenue growth and 13% EPS growth in first-quarter 2026.
The major U.S. stock indices tumbled on May 7, 2026, retreating from the record highs reached a day earlier, as investor optimism surrounding a potential trade deal between the United States and Iran receded. Volatility in oil prices over the past few days also contributed to investor concerns and weighed on Wall Street.
Against this backdrop, investors wary of high-beta volatility may consider pivoting toward low-leverage stalwarts. These fiscally conservative companies are better positioned to navigate interest rate fluctuations and geopolitical uncertainty. By providing a stable foundation in a shifting market, they can serve as a strategic hedge against a potential energy-driven economic slowdown.
Before selecting low-leverage stocks, it is important to understand what leverage is and how investing in low-leverage companies can benefit investors.
What’s the Significance of Low-Leverage Stocks?
In finance, leverage refers to the use of borrowed capital to support business operations and drive expansion. Companies typically raise such funds through debt financing, although equity financing remains an alternative. However, firms often prefer debt due to its relatively lower cost and easier availability compared to issuing equity.
Debt financing comes with inherent risks and is beneficial only when it generates returns that exceed the cost of borrowing. To limit downside risk, investors should be cautious of companies that rely excessively on debt. Prudent investing involves selecting businesses with manageable leverage, as completely debt-free companies are rare.
The equity market can be volatile at times. As an investor, if you want to avoid significant losses, we suggest focusing on stocks with low leverage, which are generally deemed 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 among the most widely used financial 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 suggests improved solvency for a company.
With the first-quarter 2026 earnings in the mid-way, investors should focus on stocks that have demonstrated solid earnings growth in recent periods.
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 aforementioned factors, it would be 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.
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 or 2 have a proven history of success.
Excluding stocks that have a negative or a zero debt-to-equity ratio, we present our five picks out of the 18 that made it through the screen.
Douglas Dynamics: It designs, manufactures, and sells snow and ice control equipment for light trucks, including snowplows, sand and salt spreaders, as well as related parts and accessories. On May 4, 2026, the company reported first-quarter 2026 results. Its net sales improved 19.7% to $137.8 million, while its adjusted earnings per share (EPS) surged a massive 300% to 36 cents.
The Zacks Consensus Estimate for PLOW’s 2026 sales indicates an improvement of 16.7% from the prior-year reported level. The stock boasts a long-term (three-to-five years) earnings growth rate of 18%. It currently sports a Zacks Rank #1.
Elbit Systems: It is a worldwide leader in Night Vision Goggles Head-Up Displays (``NVG-HUD''). On April 27, 2026, Elbit Systems announced the inauguration of a new Unmanned Aerial Systems (“UAS”) facility in Chitila, Romania, marking another milestone in the company’s ongoing expansion across Europe and its long-standing partnership with Romania’s defense industry.
The Zacks Consensus Estimate for ESLT’s 2026 revenues indicates an improvement of 14.3% from the prior-year reported actuals. The stock boasts a long-term earnings growth rate of 15.40%. ESLT currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bowman Consulting Group: It provides planning, engineering, construction management, commissioning, environmental consulting, geomatics, survey, land procurement and other technical services to customers operating in a diverse set of regulated end markets. On May 5, 2026, the company announced first-quarter 2026 results. Its gross contract revenues improved 12% year over year to $112.9 million, while its adjusted EPS soared 100% to 14 cents.
The Zacks Consensus Estimate for BWMN’s 2026 earnings indicates an improvement of 1.8% from the prior-year reported number. The stock delivered a trailing four-quarter average earnings surprise of 78.07% and currently carries a Zacks Rank #2.
Arc Resources: It is engaged in the exploration, acquisition and development of oil and natural gas properties in western Canada. On April 27, 2026, the company reported its first-quarter 2026 results. Its net income improved 44.4% year over year to $584.3 million, while total production soared 12.4%.
The Zacks Consensus Estimate for AETUF’s 2026 earnings indicates an improvement of 38.9% from the prior-year reported actuals. The stock boasts a four-quarter average earnings surprise of 12.99%. It currently sports a Zacks Rank #1.
Kirby: It is the largest domestic tank barge operator in the United States. On April 30, 2026, the company released its first-quarter 2026 results. Its revenues soared 7.4% year over year to $844 million, while its EPS grew 13% to $1.50.
The Zacks Consensus Estimate for KEX’s 2026 revenues suggests an improvement of 2.6% from the year-ago reported level. The stock boasts a long-term earnings growth rate of 13.90%. It currently carries a Zacks Rank #2.
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Buy 5 Low-Leverage Stocks as Hope Fades for End to US-Iran Conflict
Key Takeaways
The major U.S. stock indices tumbled on May 7, 2026, retreating from the record highs reached a day earlier, as investor optimism surrounding a potential trade deal between the United States and Iran receded. Volatility in oil prices over the past few days also contributed to investor concerns and weighed on Wall Street.
Against this backdrop, investors wary of high-beta volatility may consider pivoting toward low-leverage stalwarts. These fiscally conservative companies are better positioned to navigate interest rate fluctuations and geopolitical uncertainty. By providing a stable foundation in a shifting market, they can serve as a strategic hedge against a potential energy-driven economic slowdown.
We recommend low-leverage stocks, such as Douglas Dynamics (PLOW - Free Report) , Elbit Systems (ESLT - Free Report) , Bowman Consulting (BWMN - Free Report) , Arc Resources (AETUF - Free Report) , and Kirby Corp. (KEX - Free Report) .
Before selecting low-leverage stocks, it is important to understand what leverage is and how investing in low-leverage companies can benefit investors.
What’s the Significance of Low-Leverage Stocks?
In finance, leverage refers to the use of borrowed capital to support business operations and drive expansion. Companies typically raise such funds through debt financing, although equity financing remains an alternative. However, firms often prefer debt due to its relatively lower cost and easier availability compared to issuing equity.
Debt financing comes with inherent risks and is beneficial only when it generates returns that exceed the cost of borrowing. To limit downside risk, investors should be cautious of companies that rely excessively on debt. Prudent investing involves selecting businesses with manageable leverage, as completely debt-free companies are rare.
The equity market can be volatile at times. As an investor, if you want to avoid significant losses, we suggest focusing on stocks with low leverage, which are generally deemed 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 among the most widely used financial 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 suggests improved solvency for a company.
With the first-quarter 2026 earnings in the mid-way, investors should focus on stocks that have demonstrated solid earnings growth in recent periods.
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 aforementioned factors, it would be 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.
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 or 2 have a proven history of success.
Excluding stocks that have a negative or a zero debt-to-equity ratio, we present our five picks out of the 18 that made it through the screen.
Douglas Dynamics: It designs, manufactures, and sells snow and ice control equipment for light trucks, including snowplows, sand and salt spreaders, as well as related parts and accessories. On May 4, 2026, the company reported first-quarter 2026 results. Its net sales improved 19.7% to $137.8 million, while its adjusted earnings per share (EPS) surged a massive 300% to 36 cents.
The Zacks Consensus Estimate for PLOW’s 2026 sales indicates an improvement of 16.7% from the prior-year reported level. The stock boasts a long-term (three-to-five years) earnings growth rate of 18%. It currently sports a Zacks Rank #1.
Elbit Systems: It is a worldwide leader in Night Vision Goggles Head-Up Displays (``NVG-HUD''). On April 27, 2026, Elbit Systems announced the inauguration of a new Unmanned Aerial Systems (“UAS”) facility in Chitila, Romania, marking another milestone in the company’s ongoing expansion across Europe and its long-standing partnership with Romania’s defense industry.
The Zacks Consensus Estimate for ESLT’s 2026 revenues indicates an improvement of 14.3% from the prior-year reported actuals. The stock boasts a long-term earnings growth rate of 15.40%. ESLT currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bowman Consulting Group: It provides planning, engineering, construction management, commissioning, environmental consulting, geomatics, survey, land procurement and other technical services to customers operating in a diverse set of regulated end markets. On May 5, 2026, the company announced first-quarter 2026 results. Its gross contract revenues improved 12% year over year to $112.9 million, while its adjusted EPS soared 100% to 14 cents.
The Zacks Consensus Estimate for BWMN’s 2026 earnings indicates an improvement of 1.8% from the prior-year reported number. The stock delivered a trailing four-quarter average earnings surprise of 78.07% and currently carries a Zacks Rank #2.
Arc Resources: It is engaged in the exploration, acquisition and development of oil and natural gas properties in western Canada. On April 27, 2026, the company reported its first-quarter 2026 results. Its net income improved 44.4% year over year to $584.3 million, while total production soared 12.4%.
The Zacks Consensus Estimate for AETUF’s 2026 earnings indicates an improvement of 38.9% from the prior-year reported actuals. The stock boasts a four-quarter average earnings surprise of 12.99%. It currently sports a Zacks Rank #1.
Kirby: It is the largest domestic tank barge operator in the United States. On April 30, 2026, the company released its first-quarter 2026 results. Its revenues soared 7.4% year over year to $844 million, while its EPS grew 13% to $1.50.
The Zacks Consensus Estimate for KEX’s 2026 revenues suggests an improvement of 2.6% from the year-ago reported level. The stock boasts a long-term earnings growth rate of 13.90%. It currently carries a Zacks Rank #2.