Invest in These 5 Low-Leverage Stocks During Tariff Uncertainty

Market Volatility and the Role of Low-Leverage Stocks

On August 5, 2025, major U.S. stock indices experienced a slight decline of less than 1% due to weaker-than-expected services data. This downturn was further exacerbated by ongoing uncertainty surrounding trade policies, particularly as former President Donald Trump threatened to impose new tariffs on pharmaceuticals, potentially as high as 250%. These developments have created a climate of concern among investors, overshadowing recent positive earnings reports from several companies that exceeded expectations.

Despite the current market conditions, savvy investors recognize that periods of volatility can present opportunities for strategic entry into the equity market. While the overall sentiment is cautious, focusing on low-leverage stocks can provide a more stable investment approach. These stocks are typically less affected by economic downturns and offer a protective buffer against potential losses.

Understanding the Importance of Low-Leverage Stocks

Leverage in finance refers to the use of borrowed capital to fund operations or expansion. Companies often rely on debt financing, which can be cheaper and more accessible than equity financing. However, excessive leverage poses significant risks. If a company’s return on investment does not exceed the interest rate on its debt, it can lead to financial distress.

Investors should prioritize companies with minimal debt, as these are generally more resilient during economic fluctuations. A debt-free company is rare, but those with low leverage ratios are considered safer investments. One common metric used to assess leverage is the debt-to-equity ratio, calculated as total liabilities divided by shareholders' equity. A lower ratio indicates better solvency and reduced financial risk.

Analyzing Key Investment Criteria

To identify low-leverage stocks, investors should consider several factors beyond just the debt-to-equity ratio. These include:

• Debt/Equity Ratio Less Than Industry Median: Stocks that are less leveraged than their industry peers.
• Current Price Greater Than or Equal to $10: Ensures the stock is accessible for a broader range of investors.
• Average 20-Day Volume Greater Than or Equal to 50,000: Indicates sufficient liquidity for easy trading.
• Percentage Change in EPS (F(0)/F(-1)) Greater Than Industry Median: Reflects strong earnings growth, which can drive stock price appreciation.
• VGM Score of A or B: Suggests strong fundamentals and potential for growth.
• Estimated One-Year EPS Growth F(1)/F(0) Greater Than 5: Shows positive expectations for future earnings.
• Zacks Rank #1 or 2: Indicates a strong likelihood of outperforming the market.

By applying these criteria, investors can identify stocks that balance growth potential with risk management.

Top Picks for Low-Leverage Stocks

Based on these screening parameters, five stocks stand out as promising investments:

NatWest Group (NWG)

NatWest Group, a banking and financial services company, has partnered with Google Cloud to enhance its technological capabilities. The Zacks Consensus Estimate for NWG’s 2025 sales suggests a 20.1% increase from 2024. With a long-term earnings growth rate of 10.9%, NWG currently holds a Zacks Rank #2.

Zions Bancorporation (ZION)

As a diversified financial service provider, ZION reported a 9% year-over-year increase in net interest income and a 2% rise in average interest-earning assets. Its Zacks Consensus Estimate for 2025 earnings forecasts a 5% improvement, with a long-term earnings growth rate of 6.6%. ZION carries a Zacks Rank #1.

Luxfer Holdings (LXFR)

Luxfer, a materials technology company, saw a 5.8% increase in adjusted net sales and a 25% surge in adjusted earnings per share. The Zacks Consensus Estimate for 2025 sales indicates a 1.1% improvement, with a long-term earnings growth rate of 8%. LXFR has a Zacks Rank #2.

Kingstone Companies (KINS)

Kingstone, a property and casualty insurance holding company, recently declared a quarterly cash dividend, reflecting its strong financial position. The Zacks Consensus Estimate for 2025 sales and earnings both indicate a 37.9% improvement from 2024. KINS holds a Zacks Rank #2.

Ingredion Inc. (INGR)

Ingredion, an ingredients solutions provider, reported a 1% increase in adjusted operating income. Its Texture & Healthful Solutions segment showed 2% net sales growth. The Zacks Consensus Estimate for 2025 sales indicates a 1% improvement, with a long-term earnings growth rate of 11%. INGR has a Zacks Rank #2.

For investors looking to explore more options, tools like the Research Wizard can help screen and backtest strategies before making investment decisions. These resources are invaluable for navigating the complexities of the stock market and identifying opportunities that align with individual financial goals.