The majority of U.S. stock indices ended barely in the green on March 21, 2025, overcoming their recent losing streaks since investors remain wary about the long-term economic impacts of President Trump’s enhanced import tariffs. The latest uptick in the major stock indices was mostly because the Federal Reserve kept its projection for interest rate cuts broadly unchanged, indicating economic stability for the time being.
This might attract investors to invest in the stock market. However, considering the fact that the global stock market has seen major ups and downs in recent times, a prudent investor knows that to avoid big losses during a crisis, one should choose safe bet stocks like BioLife Solutions BLFS, Wildan Group WLDN, Nextracker Inc. NXT, Novo Nordisk NVO and EZCORP EZPW. These stocks bear low leverage and, therefore, should be a safer option for investors if they don’t want to lose big in times of market turmoil.
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.
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.
With the fourth-quarter 2024 earnings season almost over, 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.
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.
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 expectation.
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, here we present our five picks out of the 12 stocks that made it through the screen.
BioLife Solutions.: It is a cell and gene therapy bioproduction tools and services company. On March 3, 2025, the company reported results for the fourth quarter of 2024. BLFS’ revenues improved 31% year over year while its adjusted operating loss narrowed to $746 million.
The Zacks Consensus Estimate for BLFS’ 2025 loss suggests an improvement from 2024 actuals. The stock boasts a four-quarter average earnings surprise of 61.29%. It currently has a Zacks Rank #2.
Wildan Group: It is a provider of professional technical and consulting services to utilities, private industry and public agencies at all levels of government. On March 20, 2025, Willdan Group announced that it secured a $17.7 million contract to provide engineering and construction oversight services for Paramount Unified School District (USD). The scope of the project includes 2.2 MW of solar arrays and 44 level 2 electric vehicle charging stations across 11 sites within the District.
The Zacks Consensus Estimate for its 2025 earnings suggests a year-over-year improvement of 13.2%. The stock boasts an average earnings surprise of 66.13%. It currently sports a Zacks Rank #1.
Nextracker: It is a provider of intelligent, integrated solar tracker and software solutions used in utility-scale and distributed generation solar power plants. On Jan. 28, 2025, the company reported its financial results for the third quarter of fiscal 2025. Its backlog increased to more than $4.5 billion, while its adjusted earnings per share of $1.03 improved 7.3% year over year.
The Zacks Consensus Estimate for NXT’s fiscal 2025 sales suggests an improvement of 14.2% from fiscal 2024 actuals. The Zacks Consensus Estimate for its fiscal 2025 earnings indicates an improvement of 27.1% from fiscal 2024 actuals. It currently has a Zacks Rank #2.
Novo Nordisk: It is a global healthcare company and a prominent player in the diabetes market with a full portfolio of glucagon-like peptide 1 (GLP-1) receptor agonists, modern insulins and human insulins. On March 10, 2025, Novo Nordisk announced headline results from REDEFINE 2, a phase 3 trial in the global REDEFINE program. REDEFINE 2 is a 68-week efficacy and safety trial investigating once-weekly subcutaneous CagriSema (a fixed dose combination of cagrilintide 2.4 mg and semaglutide 2.4 mg) compared to placebo. The trial achieved its primary endpoint by demonstrating a statistically significant and superior weight loss at week 68 with CagriSema versus placebo.
NVO boasts a long-term earnings growth rate of 24.2%. The Zacks Consensus Estimate for its 2025 sales suggests a year-over-year improvement of 18.5%. It currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ezcorp.: It is engaged in establishing, acquiring and operating pawnshops, which function as convenient sources of consumer credit and as value-oriented specialty retailers of primarily previously owned merchandise. On Feb. 5, 2025, the company announced its first-quarter fiscal 2025 results. Its adjusted net income improved 14% year over year, while revenues increased 7%.
The Zacks Consensus Estimate for its fiscal 2025 sales suggests a 7.7% improvement from the fiscal 2024 reported number. The company delivered an average earnings surprise of 10.31% in the last four quarters. It currently sports a Zacks Rank #1.
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Novo Nordisk A/S (NVO) : Free Stock Analysis Report
EZCORP, Inc. (EZPW) : Free Stock Analysis Report
BioLife Solutions, Inc. (BLFS) : Free Stock Analysis Report
Willdan Group, Inc. (WLDN) : Free Stock Analysis Report
Nextracker Inc. (NXT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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