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Zacks.com featured highlights include: Louisiana-Pacific, ManpowerGroup, Kulicke and Soffa, Universal Health and DMC

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For Immediate Release

Chicago, IL - March 6, 2018 - Stocks in this week's article Louisiana-Pacific Corporation LPX , ManpowerGroup MAN , Kulicke and Soffa Industries, Inc. KLIC, Universal Health Services UHS and DMC Global BOOM .

5 Low-Leverage Stocks to Buy as Fed Targets 4 Rate Hikes in 2018

"Every crisis has its own set of villains - but all require a similar ingredient to create a true crisis: too much leverage." - Andrew Ross Sorkin

Financial leverage is a popular investment strategy that refers to the amount of debt that a company uses to finance its operations. Although debt brings with it the burden of interest payment, it is preferred to equity financing because of its cheap availability. Another perk of debt financing is that the interest on debt is tax deductible.

Interestingly, the United States - the world's richest economy - is the biggest borrower as well. In fact, according to the FY19 Federal Budget, at the end of FY18, gross U.S. federal government debt is estimated to be $21.09 trillion, more than double the debt load in the last decade.

Yet, debt is something that everyone likes to avoid. This is because debt financing means borrowing against future earnings, which simply means that instead of using all future profits to grow the business one has to allocate a portion for debt repayments.

Nevertheless, this should not dissuade one from investing in U.S. stocks. After all, in spite of such high debt levels, the United States remains the largest economy in the world in terms of GDP, representing a quarter share of the global economy per the latest World Bank figures

The problem arises when debt a company bears becomes exorbitant. In particular, companies with high debt loads are more vulnerable during economic downturns and can even go bankrupt, especially in periods of high interest rate.

With the Federal Reserve under new chief Jerome Powell targeting four interest rate hikes this year, more than previously expected hikes of three, the market scenario does not seem to be much in favor of companies opting for debt financing.

Considering this, the need of the hour is to choose stocks prudently, avoiding those that carry high debt loads. So the crux of a safe investment lies in identifying low leverage stocks.

This is where the significance of financial leverage ratio comes into play. This ratio measures the extent of financial leverage a company bears. Several leverage ratios have been developed for this purpose, with debt-to-equity ratio being the most popular.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.nasdaq.com/article/5-low-leverage-stocks-to-buy-as-fed-targets-4-rate-hikes-in-2018-cm929264

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.

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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Kulicke and Soffa Industries, Inc. (KLIC): Free Stock Analysis Report

Louisiana-Pacific Corporation (LPX): Free Stock Analysis Report

Universal Health Services, Inc. (UHS): Free Stock Analysis Report

DMC Global Inc. (BOOM): Free Stock Analysis Report

ManpowerGroup (MAN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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