Wall Street kicked off this week on a mixed note. While the Dow Jones managed to edge higher, both the S&P 500 and tech-heavy Nasdaq slipped under pressure from rising oil prices and technology pullbacks.
Despite recent market rallies, persistent macroeconomic pressure and geopolitical flashpoints — including recent Houthi strikes against Saudi airport infrastructure and elevated tensions in the Strait of Hormuz — continue to fuel market uncertainty.
Against this backdrop, for risk-averse investors concerned about high-beta swings, pivoting toward low-leverage companies offers a more defensive strategy.
These financially prudent firms maintain strong balance sheets with minimal debt, equipping them to navigate shifting interest rates and economic headwinds. By containing financial risk while generating consistent cash flows, low-leverage stalwarts provide a durable foundation for your portfolio and an effective hedge against energy-driven downturns.
Hence, we recommend low-leverage stocks, such as Micron Technology MU, Casey’s General Stores CASY, Ganesco GCO, Plains Group PAGP and Vince Holding VNCE.
Before selecting low-leverage stocks, it is important to understand what leverage is and how investing in low-leverage companies can benefit investors.
What’s the Significance of Low-Leverage Stocks?
In finance, leverage refers to the use of borrowed capital to support business operations and drive expansion. Companies typically raise such funds through debt financing, although equity financing remains an alternative. However, firms often prefer debt due to its relatively lower cost and easier availability compared to issuing equity.
Debt financing comes with inherent risks and is beneficial only when it generates returns that exceed the cost of borrowing. To limit downside risk, investors should be cautious of companies that rely excessively on debt. Prudent investing involves selecting businesses with manageable leverage, as completely debt-free companies are rare.
The equity market can be volatile at times. As an investor, if you want to avoid significant losses, we suggest focusing on stocks with low leverage, which are generally deemed less risky.
To identify such stocks, several leverage ratios have historically been developed to measure the amount of debt a company carries. The debt-to-equity ratio is among the most widely used financial ratios.
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 lower debt-to-equity ratio suggests improved solvency for a company.
With the third-quarter 2026 earnings season in its first lap, investors should focus on stocks that have demonstrated solid earnings growth in recent periods.
If a stock carries a high debt-to-equity ratio during an economic downturn, its seemingly strong earnings could quickly turn into a nightmare.
The Winning Strategy
Considering the aforementioned factors, it would be 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 select stocks with the potential to provide steady returns, we have expanded our screening criteria to include additional factors.
Other Parameters:
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 $10 or higher.
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 expectations.
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 zero debt-to-equity ratio, we present our five picks out of the 19 that made it through the screen.
Micron Technology: It manufactures and markets high-performance memory and storage technologies, including Dynamic Random Access Memory, NAND flash memory, NOR Flash and other technologies. On Sept. 30, 2026, Micron announced its fourth-quarter fiscal 2026 results.
The company’s quarterly revenues improved a massive 266.3% year over year to $41.46 billion, while its adjusted earnings per share (EPS) surged from $3.03 to $33.42 in the fiscal fourth quarter.
The Zacks Consensus Estimate for MU’s fiscal 2027 revenues indicates an improvement of 105.1% from the prior-year reported level. The stock boasts a long-term (three-to-five-years) earnings growth rate of 32.60%. It currently sports a Zacks Rank #1.
Casey’s General Stores: It is an American convenience store chain and the third-largest convenience store retailer in the United States. On Sept. 8, 2026, the company announced its first-quarter fiscal 2026 results. Its inside same-store sales increased 3.2% year over year, while its EPS improved nearly 28% to $7.37.
The Zacks Consensus Estimate for CASY’s fiscal 2026 revenues indicates an improvement of 16.9% from the prior-year reported actuals. The stock currently boasts a long-term earnings growth rate of 14.30% and a Zacks Rank of 2.
Ganesco: It is a specialty retail and branded company, which sells footwear and accessories in retail stores. On Sept. 15, 2026, Ganesco announced the launch of its Wrangler footwear collection, marking a milestone in its multiyear licensing agreement with Kontoor Brands and its legendary denim and lifestyle brand.
The Zacks Consensus Estimate for GCO’s fiscal 2027 earnings indicates an improvement of 62.1% from the prior-year reported number. The stock currently boasts a four-quarter average earnings surprise of 11.16% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Plains Group: It is involved in the transportation, storage, terminalling, and marketing of crude oil and refined products. It also focuses on the processing, transportation, fractionation, storage, and marketing of natural gas liquids, including ethane and natural gasoline products, as well as propane and butane products.
On Sept. 16, 2026, the company announced that a wholly owned subsidiary of it has entered into a definitive agreement to acquire SCM PR II, LLC (Silver Creek) from subsidiaries of Tailwater Capital and The Energy and Minerals Group for an aggregate cash consideration of $585 million. Silver Creek owns and operates one of the largest integrated crude oil gathering systems in the Powder River Basin, serving a diversified customer base that includes many of the basin’s leading producers.
The Zacks Consensus Estimate for PAGP’s 2026 revenues indicates an improvement of 30.6% from the prior-year reported actuals. The Zacks Consensus Estimate for PAGP’s 2026 earnings indicates an improvement of 236.2% from the prior-year reported numbers. It currently sports a Zacks Rank #1.
Vince Holdings: It offers a broad range of women's and men's ready-to-wear apparel, including its signature cashmere sweaters, leather jackets, luxe leggings, dresses, silk and woven tops, denim and footwear. On Sept. 10, 2026, the company announced its second-quarter fiscal 2026 results. Its net sales increased 11.7% year over year to $81.8 million, while adjusted net income improved a solid 175.5% to $13.5 million.
The Zacks Consensus Estimate for VNCE’s fiscal 2026 revenues indicates an improvement of 14% from the prior-year reported actuals. The Zacks Consensus Estimate for VNCE’s fiscal 2026 earnings implies a solid surge of 175% from the prior-year reported figures. The stock currently sports a Zacks Rank #1.
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Micron Technology, Inc. (MU): Free Stock Analysis Report
Genesco Inc. (GCO): Free Stock Analysis Report
Casey's General Stores, Inc. (CASY): Free Stock Analysis Report
Vince Holding Corp. (VNCE): Free Stock Analysis Report
Plains Group Holdings, L.P. (PAGP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).