We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Low-Leverage Stocks to Buy Amid Disappointing Job Data
Major U.S. stock indices ended on a dismal note on Aug 2, reflecting investors’ disappointment following the release of discouraging U.S. job data. The latest job report showed a rise in the U.S. unemployment rate to 4.25% and a slowdown in new job creation, which sparked the possibility of an upcoming recession and resulted in a notable loss in the stock market.
Against this backdrop, stock market players might not feel confident in making share market investments. However, a prudent investor knows that one can buy stocks with low leverage even in such periods of market decline. Therefore, we recommend some safe bets like Vital Farms, CSW Industrials, Atmos Energy, NiSource, and Kirby Corp. Choosing them can shield investors from incurring huge losses in times of crisis.
Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock helps investors.
In finance, leverage is a term used to denote the practice of borrowing capital by companies to run their operations smoothly and expand the same. 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.
As we approach the middle of the second-quarter earnings season, 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.
Excluding stocks that have a negative or a zero debt-to-equity ratio, here we present our five picks out of the 19 stocks that made it through the screen.
Vital Farms: The company offers a range of produced pasture-raised foods, which include shell eggs, butter, hard-boiled eggs, ghee and liquid whole eggs. On Jun 26, 2024, Vital Farms revealed plans to expand its resilient supply chain with a second world-class egg washing and packing facility located in Seymour, IN. The new 72-acre facility will enable Vital Farms to continue growing its pasture-raised egg business and is expected to help generate more than $350 million in additional revenues.
VITL delivered an average four-quarter earnings surprise of 102.10%. It currently sports a Zacks Rank #1. The Zacks Consensus Estimate for VITL’s 2024 sales suggests a solid 24.9% improvement from the 2023 reported figure.
CSW Industrials: It manufactures and sells industrial products like coatings, sealants, adhesives and specialty chemicals. On Jul 31, 2024, CSW Industrials reported its first-quarter fiscal 2025 results. Its revenues increased 11.2% year over year to $226.2 million, while earnings grew 25.4% to $2.47.
CSWI currently holds a Zacks Rank #2. The company boasts a long-term earnings growth rate of 15%. The Zacks Consensus Estimate for CWSI’s fiscal 2025 sales suggests a 6.6% improvement from the fiscal 2024 reported actuals.
Atmos Energy: It is engaged in regulated natural gas distribution and storage business. On May 8, 2024, Atmos Energy announced second-quarter fiscal 2024 results. Its earnings per share came in at $4.93, higher than the year-ago quarter’s level of $4.40.
The company boasts a long-term earnings growth rate of 7%. The Zacks Consensus Estimate for ATO’s fiscal 2024 sales implies an increase of 6.9% from fiscal 2023 sales. ATO currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
NiSource: It provides natural gas, electricity and other products and services in the United States. On Jul 31, 2024, NiSource received a decision from the Indiana Utility Regulatory Commission (IURC) to adjust gas rates for its Northern Indiana Public Service Company LLC (NIPSCO), effective August 2024. The newly approved rates will allow for system upgrades to support economic development and job creation, along with infrastructure modernization and improvements that will directly benefit customers and communities – including an estimated $1.1 billion in investments through the end of 2024.
NI currently carries a Zacks Rank #2. The stock has an average four-quarter earnings surprise of 6.80%. NI has a long-term earnings growth rate of 6%.
Kirby: It is the largest domestic tank barge operator in the United States, which is responsible for transporting bulk liquid products. On Apr 24, 2024, the company reported its first-quarter 2024 results. Its earnings of $1.19 per share improved a solid 75% and revenues grew 7.7% on a year-over-year basis.
KEX currently holds a Zacks Rank #2. The company boasts a long-term earnings growth rate of 30.8%. The Zacks Consensus Estimate for KEX’s 2024 sales suggests a 6.2% improvement from the 2023 reported figure.
You can get the rest of the 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.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks.com featured highlights include Vital Farms CSW Industrials, Atmos, NiSource and Kirby
For Immediate Release
Chicago, IL – August 6, 2024 – Stocks in this week’s article are Vital Farms (VITL - Free Report) , CSW Industrials (CSWI - Free Report) , Atmos Energy (ATO - Free Report) , NiSource (NI - Free Report) , and Kirby Corp. (KEX - Free Report) .
5 Low-Leverage Stocks to Buy Amid Disappointing Job Data
Major U.S. stock indices ended on a dismal note on Aug 2, reflecting investors’ disappointment following the release of discouraging U.S. job data. The latest job report showed a rise in the U.S. unemployment rate to 4.25% and a slowdown in new job creation, which sparked the possibility of an upcoming recession and resulted in a notable loss in the stock market.
Against this backdrop, stock market players might not feel confident in making share market investments. However, a prudent investor knows that one can buy stocks with low leverage even in such periods of market decline. Therefore, we recommend some safe bets like Vital Farms, CSW Industrials, Atmos Energy, NiSource, and Kirby Corp. Choosing them can shield investors from incurring huge losses in times of crisis.
Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock helps investors.
In finance, leverage is a term used to denote the practice of borrowing capital by companies to run their operations smoothly and expand the same. 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.
As we approach the middle of the second-quarter earnings season, 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.
Excluding stocks that have a negative or a zero debt-to-equity ratio, here we present our five picks out of the 19 stocks that made it through the screen.
Vital Farms: The company offers a range of produced pasture-raised foods, which include shell eggs, butter, hard-boiled eggs, ghee and liquid whole eggs. On Jun 26, 2024, Vital Farms revealed plans to expand its resilient supply chain with a second world-class egg washing and packing facility located in Seymour, IN. The new 72-acre facility will enable Vital Farms to continue growing its pasture-raised egg business and is expected to help generate more than $350 million in additional revenues.
VITL delivered an average four-quarter earnings surprise of 102.10%. It currently sports a Zacks Rank #1. The Zacks Consensus Estimate for VITL’s 2024 sales suggests a solid 24.9% improvement from the 2023 reported figure.
CSW Industrials: It manufactures and sells industrial products like coatings, sealants, adhesives and specialty chemicals. On Jul 31, 2024, CSW Industrials reported its first-quarter fiscal 2025 results. Its revenues increased 11.2% year over year to $226.2 million, while earnings grew 25.4% to $2.47.
CSWI currently holds a Zacks Rank #2. The company boasts a long-term earnings growth rate of 15%. The Zacks Consensus Estimate for CWSI’s fiscal 2025 sales suggests a 6.6% improvement from the fiscal 2024 reported actuals.
Atmos Energy: It is engaged in regulated natural gas distribution and storage business. On May 8, 2024, Atmos Energy announced second-quarter fiscal 2024 results. Its earnings per share came in at $4.93, higher than the year-ago quarter’s level of $4.40.
The company boasts a long-term earnings growth rate of 7%. The Zacks Consensus Estimate for ATO’s fiscal 2024 sales implies an increase of 6.9% from fiscal 2023 sales. ATO currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
NiSource: It provides natural gas, electricity and other products and services in the United States. On Jul 31, 2024, NiSource received a decision from the Indiana Utility Regulatory Commission (IURC) to adjust gas rates for its Northern Indiana Public Service Company LLC (NIPSCO), effective August 2024. The newly approved rates will allow for system upgrades to support economic development and job creation, along with infrastructure modernization and improvements that will directly benefit customers and communities – including an estimated $1.1 billion in investments through the end of 2024.
NI currently carries a Zacks Rank #2. The stock has an average four-quarter earnings surprise of 6.80%. NI has a long-term earnings growth rate of 6%.
Kirby: It is the largest domestic tank barge operator in the United States, which is responsible for transporting bulk liquid products. On Apr 24, 2024, the company reported its first-quarter 2024 results. Its earnings of $1.19 per share improved a solid 75% and revenues grew 7.7% on a year-over-year basis.
KEX currently holds a Zacks Rank #2. The company boasts a long-term earnings growth rate of 30.8%. The Zacks Consensus Estimate for KEX’s 2024 sales suggests a 6.2% improvement from the 2023 reported figure.
You can get the rest of the 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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2316225/5-low-leverage-stocks-to-buy-amid-disappointing-job-data
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: https://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.