For Immediate Release
Chicago, IL - January 8, 2019 - Stocks in this week's article include: Helmerich & Payne, Inc. HP , Manulife Financial Corp. MFC , HEICO Corp. HEI , Amedisys, Inc. AMED and Titan Machinery Inc. TITN . Kevin Matras screens for companies showing their 'first' profit and explains why they are ones to watch. Screen of the Week written by Kevin Matras of Zacks Investment Research:
Buy These 5 Low-Leverage Stocks to Stay Away from Debt Traps
Wall Street ended the first week of 2019 on an encouraging note, bouncing back from its turbulent start to the year, after stellar economic data point eased fears of a looming recession. In particular, the Federal Reserve chairman Jerome Powell recently announced that the overall global economy looks promising amid choppy market, while on the other hand, the Labor Department has released increased U.S. non-farm payrolls data - the biggest jump since February.
Both these news have infused enough confidence among investors about the U.S. stock market's growth potential, as reflected in the suspension of the sell-off that Wall Street witnessed at the very onset of 2019. Notably, these developments are now anticipated to boost the stock market.
Nevertheless, one should remember that nothing is eternal and uncertainty can hit the global equity market anytime, without any prior notice. And if it does, an investor would want to take the right precautions for such periods of crisis.
To this end, it is imperative to mention that since debt-ridden companies are more vulnerable at times of volatility, it is better to avoid those for achieving optimal returns.
Of course, entirely avoiding companies with debt loads is virtually impossible as debt financing is an inherent feature of corporate financing. Still eliminating the ones bearing exorbitant debt loads might be a wise idea, since the more the company is leveraged, the more it is prone to get hit at times of a financial crunch.
And here comes the importance of leverage ratios, which are used by analysts to ensure that no investor chooses corporations with a high debt burden. Debt-to-equity ratio is one such measure, perhaps the most popular one, to evaluate a company's creditworthiness for potential equity investments.
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 indicates improved solvency for a company.
In general, investors target companies with solid earnings growth projections. But, in the uncertain world of investment, markets can trip anytime, particularly affecting companies with a higher degree of financial leverage. Therefore, 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/346060/buy-these-5-low-leverage-stocks-to-stay-away-from-debt-traps
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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 Titan Machinery Inc. (TITN): Free Stock Analysis Report Heico Corporation (HEI): Free Stock Analysis Report Manulife Financial Corp (MFC): Free Stock Analysis Report Amedisys, Inc. (AMED): Free Stock Analysis Report Helmerich & Payne, Inc. (HP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research