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Zacks.com highlights: Rice Midstream Partners, Jacobs Engineering Group, Lam Research, Diplomat Pharmacy and Forward Air

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For Immediate Release

Chicago, IL – Jan 15, 2018 - Stocks in this week’s article include: Rice Midstream Partners LP RMP, Jacobs Engineering Group Inc. JEC, Lam Research Corporation LRCX, Diplomat Pharmacy, Inc. DPLO and Forward Air Corporation FWRD.

Screen of the Week of Zacks Investment Research:

5 Low Leverage Stocks to Buy Amid Rate Hike Woes

Debt financing is a common practice among corporates to ensure smooth operations and business expansion. This is because depending solely on retained earnings for business growth is impracticable.

Although companies may raise capital through equity financing, debt financing has always been a favored choice. While debt financing brings with it the liability of interest payment, it provides funding at lower rates than equity financing, especially in periods of historically low interest rates. Another perk of debt financing is that the interest on debt is tax deductible.

Yet, debt financing has its drawbacks. Since too much debt increases the cost of capital for the company, bearing huge debt tends to shoot up the company’s risk of bankruptcy, especially in times of economic crisis.

With the Federal Reserve having raised their benchmark interest rate last December and two more hikes expected by analysts this year, the debt scenario does not seem very favorable for U.S. stocks.

The fact that only a fortunate few can avoid taking debt, should not dissuade investors from betting on stocks. Instead, a prudent investor will try to pick stocks that are less financially leveraged as companies with high debt load are risky options.

And here comes the importance of leverage ratios, which have been constructed historically to save investors from debt traps. The debt-to-equity ratio is one such measure, perhaps the most popular one, to evaluate a company’s credit worthiness, 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 implies that it has a more or less financially stable business, thereby making it a better investment pick.

With the Q4 reporting cycle about to begin, investors will tend to target stocks exhibiting solid earnings growth.

But choosing stocks that boast earnings growth only might not be a wise investment strategy. A higher degree of leverage can turn an attractive investment option into a nightmare in times of financial crisis.

And that's what we're screening for today…

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/288637/5-low-leverage-stocks-to-buy-amid-rate-hike-woes

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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

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Forward Air Corporation (FWRD) : Free Stock Analysis Report
 
Jacobs Engineering Group Inc. (JEC) : Free Stock Analysis Report
 
Rice Midstream Partners LP (RMP) : Free Stock Analysis Report
 
Diplomat Pharmacy, Inc. (DPLO) : Free Stock Analysis Report
 
Lam Research Corporation (LRCX) : Free Stock Analysis Report
 
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