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Zacks.com featured highlights: EMCOR Group, Huntington Ingalls, Lam Research, SK Telecom and Landstar System

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For Immediate Release

Chicago, IL – November 29, 2017 - Stocks in this week’s article EMCOR Group, Inc. (EME - Free Report) , Huntington Ingalls Industries, Inc. (HII - Free Report) , Lam Research Corp. (LRCX - Free Report) , SK Telecom Co., Ltd. (SKM - Free Report) and Landstar System, Inc. (LSTR - Free Report) .

Bet on These 5 Low-Leverage Stocks for Assured Returns

A company needs exogenous funds for smooth operations, meeting obligations and expanding business; with capital being one of the basic factors of production. Although there is option for equity financing, a comparative analysis of the cost of capital theory reveals that most companies prefer debt financing over equity. This is because debt is available at a lower cost compared to equity, especially in periods of low interest rates.

Interestingly, the U.S. — the world’s richest economy — is the biggest borrower as well. In fact, according to the FY19 Federal Budget, at the end of FY18, gross U.S. federal government debt is estimated to be $21.09 trillion, more than double the debt load in the last decade.

No one voluntarily wishes to be part of a debt-ridden nation. This is because debt brings with it the burden of interest payments.

Then again, this should not dissuade one from investing in U.S. stocks. After all, in spite of such high debt levels, the United States remains the largest economy in the world in terms of GDP, representing a quarter share of the global economy per the latest World Bank figures.

The problem arises when leverage, referred to as the amount of debt a company bears, becomes exorbitant. In particular, companies with high debt loads are more vulnerable during economic downturns and can even go bankrupt.

Therefore, the need of the hour is to choose stocks prudently, avoiding those with high debt loads. So the crux of safe investment lies in identifying low leverage stocks.

This is where the significance of financial leverage ratio comes into play. This ratio measures the extent of financial leverage a company bears. Several leverage ratios have been developed for this purpose, with debt-to-equity ratio being the most popular

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/284150/bet-on-these-5-low-leverage-stocks-for-assured-returns

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.

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