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Zacks.com featured highlights include: Titan Machinery, Herc Holdings, Boise Cascade, Selective Insurance and Schneider National
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For Immediate Release
Chicago, IL – September 10, 2021 – Stocks in this week’s article are Titan Machinery Inc. (TITN - Free Report) , Herc Holdings Inc. (HRI - Free Report) , Boise Cascade Company (BCC - Free Report) , Selective Insurance Group, Inc. (SIGI - Free Report) and Schneider National, Inc. (SNDR - Free Report) .
5 Low-Leverage Stocks to Buy for Safety in Times of Crisis
It is always profitable for an investor to keep safe-bet stocks in his or her portfolio to minimize loss impact at times of crisis. So, the next question that comes to our mind is how to choose such safe-bet stocks. The answer is to select companies that are not hugely debt-ridden since it is almost impossible to find a debt-free stock.
Here comes the importance of the term "leverage", which refers to the strategy of borrowed capital that companies use to run their operations. Now, the relation between leverage and debt lies in the fact that the majority of the firms prefer debt financing over equity financing, to avoid equity dilution, for capital borrowing.
Therefore, in most cases, leverage indicates debt financing. However, debt financing is not always desirable and remains a feasible option only as long as the companies succeed in generating a higher rate of return compared to the interest rate. Exorbitant debt financing might even lead to a corporation's bankruptcy in the worst-case scenario.
It is for this reason that while choosing a safe-bet stock, a prudent investor should be aware of its debt level. If a stock is highly leveraged, which means it possesses considerably high debt, it is wise to avoid it.
Considering the aforementioned discussion, a low-leverage stock should find a place in an investor's portfolio. For measuring this leverage, several ratios have been used historically. The debt-to-equity ratio is one of the most common among such 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 company with a lower debt-to-equity ratio shows improved solvency for a company.
With the third-quarter earnings season almost at our doorstep, investors must be eyeing stocks that exhibited solid earnings growth in the recent past. But if a stock bears a high debt-to-equity ratio, in times of economic downturns, its so-called booming earnings picture might turn into a nightmare.
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 >>.
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.
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include: Titan Machinery, Herc Holdings, Boise Cascade, Selective Insurance and Schneider National
For Immediate Release
Chicago, IL – September 10, 2021 – Stocks in this week’s article are Titan Machinery Inc. (TITN - Free Report) , Herc Holdings Inc. (HRI - Free Report) , Boise Cascade Company (BCC - Free Report) , Selective Insurance Group, Inc. (SIGI - Free Report) and Schneider National, Inc. (SNDR - Free Report) .
5 Low-Leverage Stocks to Buy for Safety in Times of Crisis
It is always profitable for an investor to keep safe-bet stocks in his or her portfolio to minimize loss impact at times of crisis. So, the next question that comes to our mind is how to choose such safe-bet stocks. The answer is to select companies that are not hugely debt-ridden since it is almost impossible to find a debt-free stock.
Here comes the importance of the term "leverage", which refers to the strategy of borrowed capital that companies use to run their operations. Now, the relation between leverage and debt lies in the fact that the majority of the firms prefer debt financing over equity financing, to avoid equity dilution, for capital borrowing.
Therefore, in most cases, leverage indicates debt financing. However, debt financing is not always desirable and remains a feasible option only as long as the companies succeed in generating a higher rate of return compared to the interest rate. Exorbitant debt financing might even lead to a corporation's bankruptcy in the worst-case scenario.
It is for this reason that while choosing a safe-bet stock, a prudent investor should be aware of its debt level. If a stock is highly leveraged, which means it possesses considerably high debt, it is wise to avoid it.
Considering the aforementioned discussion, a low-leverage stock should find a place in an investor's portfolio. For measuring this leverage, several ratios have been used historically. The debt-to-equity ratio is one of the most common among such 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 company with a lower debt-to-equity ratio shows improved solvency for a company.
With the third-quarter earnings season almost at our doorstep, investors must be eyeing stocks that exhibited solid earnings growth in the recent past. But if a stock bears a high debt-to-equity ratio, in times of economic downturns, its so-called booming earnings picture might turn into a nightmare.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1794327/5-low-leverage-stocks-to-buy-for-safety-in-times-of-crisis
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 >>.
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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
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: www.Zacks.com
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.