For Immediate Release
Chicago, IL – January 8, 2019 – Stocks in this week’s article include: Helmerich & Payne, Inc. (HP - Free Report) , Manulife Financial Corp. (MFC - Free Report) , HEICO Corp. (HEI - Free Report) , Amedisys, Inc. (AMED - Free Report) and Titan Machinery Inc. (TITN - Free Report) . Kevin Matras screens for companies showing their 'first' profit and explains why they are ones to watch.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
Buy These 5 Low-Leverage Stocks to Stay Away from Debt Traps
Wall Street ended the first week of 2019 on an encouraging note, bouncing back from its turbulent start to the year, after stellar economic data point eased fears of a looming recession. In particular, the Federal Reserve chairman Jerome Powell recently announced that the overall global economy looks promising amid choppy market, while on the other hand, the Labor Department has released increased U.S. non-farm payrolls data — the biggest jump since February.
Both these news have infused enough confidence among investors about the U.S. stock market’s growth potential, as reflected in the suspension of the sell-off that Wall Street witnessed at the very onset of 2019. Notably, these developments are now anticipated to boost the stock market.
Nevertheless, one should remember that nothing is eternal and uncertainty can hit the global equity market anytime, without any prior notice. And if it does, an investor would want to take the right precautions for such periods of crisis.
To this end, it is imperative to mention that since debt-ridden companies are more vulnerable at times of volatility, it is better to avoid those for achieving optimal returns.
Of course, entirely avoiding companies with debt loads is virtually impossible as debt financing is an inherent feature of corporate financing. Still eliminating the ones bearing exorbitant debt loads might be a wise idea, since the more the company is leveraged, the more it is prone to get hit at times of a financial crunch.
And here comes the importance of leverage ratios, which are used by analysts to ensure that no investor chooses corporations with a high debt burden. Debt-to-equity ratio is one such measure, perhaps the most popular one, to evaluate a company’s creditworthiness for potential equity investments.
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 company with a lower debt-to-equity ratio indicates improved solvency for a company.
In general, investors target companies with solid earnings growth projections. But, in the uncertain world of investment, markets can trip anytime, particularly affecting companies with a higher degree of financial leverage. Therefore, blindly investing in stocks displaying solid earnings growth without considering their debt level is not a wise move.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/346060/buy-these-5-low-leverage-stocks-to-stay-away-from-debt-traps
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.