Advertisement
U.S. markets open in 8 hours 56 minutes
  • S&P Futures

    5,210.50
    -4.25 (-0.08%)
     
  • Dow Futures

    39,220.00
    -3.00 (-0.01%)
     
  • Nasdaq Futures

    18,190.75
    -40.75 (-0.22%)
     
  • Russell 2000 Futures

    2,049.70
    -0.10 (-0.00%)
     
  • Crude Oil

    82.72
    0.00 (0.00%)
     
  • Gold

    2,164.90
    +0.60 (+0.03%)
     
  • Silver

    25.34
    +0.08 (+0.32%)
     
  • EUR/USD

    1.0873
    -0.0004 (-0.03%)
     
  • 10-Yr Bond

    4.3400
    -4.3400 (-100.00%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2718
    -0.0011 (-0.09%)
     
  • USD/JPY

    149.8080
    +0.7100 (+0.48%)
     
  • Bitcoin USD

    65,668.84
    -2,285.80 (-3.36%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,783.38
    +42.98 (+0.11%)
     

Zacks.com featured highlights include: Atmos Energy, James River Group, AZZ, WellCare Health Plans and Oasis Midstream

For Immediate Release

Chicago, IL – July 1, 2019 - Stocks in this week’s article are Atmos Energy Corp. ATO, James River Group Holdings, Ltd. JRVR, AZZ Inc. AZZ, WellCare Health Plans, Inc. WCG and Oasis Midstream Partners LP OMP.

Buy These 5 Low-Leverage Stocks to Avoid Investment Risk

Companies often need exogenous funds to ensure smooth operations and expansion of business. These funds can be arranged through debt and equity. Here comes the concept of leverage, which is basically the usage of debt for such purposes.

Now a comparative analysis of the theory of cost of capital reveals that most companies prefer debt financing over equity since debt is cheaper, especially in periods of low interest rates.

This is because when a company resorts to debt financing, it takes on fixed expenses in the form of interest payments for a specific time period. However, in case of equity financing, a shareholder not only becomes a partial owner of the company but develops a direct claim on the company’s future profits as well. So, debt financing remains the preferred option for corporates.

However, debt financing has its share of drawbacks. The problem arises when leverage, referred to as the amount of debt a company bears, becomes exorbitant. A high degree of financial leverage means high interest payments, which affect the company's bottom line.

Therefore, to avoid any kind of risky investment, choosing a less debt-ridden stock should be an appropriate option for a risk-averse investor.  And here comes the importance of leverage ratios, which can measure the exact amount of debt risk a company bears. Debt-to-equity ratio is one such measure, perhaps the most popular one, to evaluate a company’s creditworthiness for potential equity investments.

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.

Investors are on the lookout for stocks that exhibited solid earnings growth in the last couple of quarters. However, 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/435510/buy-these-5-low-leverage-stocks-to-avoid-investment-risk

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:  https://twitter.com/zacksresearch

Join us on Facebook:  https://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

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.

 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
 
AZZ Inc. (AZZ) : Free Stock Analysis Report
 
James River Group Holdings, Ltd. (JRVR) : Free Stock Analysis Report
 
WellCare Health Plans, Inc. (WCG) : Free Stock Analysis Report
 
Oasis Midstream Partners LP (OMP) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Advertisement