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Zacks.com featured highlights: Omega Protein, NTT DOCOMO, Amphastar Pharmaceuticals, Comfort Systems USA and Universal Forest Products

For Immediate Release

Chicago, IL - June 23, 2016 - Stocks in this week's article include: Omega Protein Corporation ( OME ), NTT DOCOMO, Inc. ( DCM ), Amphastar Pharmaceuticals, Inc. ( AMPH ), Comfort Systems USA Inc. ( FIX ) and Universal Forest Products Inc. ( UFPI ).

Screen of the Week of Zacks Investment Research:

Buy These 5 Low-Leverage Stocks for a Safe Portfolio

"Every time you borrow money, you're robbing your future self." - Nathan W. Morris

Of course, since capital is one of the basic requirements of production, companies - especially those with a dearth of resources - often resort to debt financing to boost up their future earnings. This is because equity financing is relatively costlier. Another perk to debt financing is that the interest expense is tax deductible.

However, for a safe investment strategy, understanding the amount of financial leverage that a company bears is crucial. This is because financial leverage multiplies the underlying business risk. So, while financial leverage brings with it the expectation of increased return in the future, it also carries the risk of losing money substantially. In fact, in any unfavorable turn of events, exorbitant debt financing bears the risk of dragging a company into bankruptcy.

For the purpose of safe investment in stocks, varied parameters based on leverage ratio have been constructed historically. These parameters serve the purpose of estimating the credit worthiness of a company. One such prominent tool is debt-to-equity ratio.

What is Debt-to-Equity Ratio?

Debt-to-Equity Ratio = Total Liabilities/Shareholders' Equity

In simple terms, debt-to-equity is a solvency ratio that measures a company's debt position and its ability to pay interest. A lower debt-to-equity ratio greatly contributes to an investor's confidence in a company's financial stability.

This is because a high debt-to-equity ratio indicates a huge level of repayment that the company has to make in connection with the large debt amount, which had once exploded its earnings. This in reality, makes the company's so-called solid earnings extremely volatile.

Choose the Right Strategy

Instead of blindly targeting high earnings yielding stocks, it is wise for investors to pour money in low leverage stocks.

However, choosing stocks based solely on one financial metric might not fetch the desired outcome. To ensure maximum possible return from this strategy, we have expanded our screening procedure to include some other criteria.

Here is the final screen:

Debt/Equity less than X-Industry Median: Those stocks that are less leveraged than their industry peers.

Current Price greater than or equal to 10: The stocks must be trading at a minimum of $10 or above.

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.

Estimated One-Year EPS Growth F(1)/F(0) greater than 5: This shows earnings growth expectation.

Zacks Rank #1 (Strong Buy) or #2 (Buy): No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven history of success.

VGMScore of A or B: Our research shows that stocks with a VGM Score of 'A' or 'B' when combined with a Zacks Rank #1 or 2 offer the best upside potential.

Although 35 stocks passed the screen, we have eliminated those with a negative or a zero debt-to-equity ratio.

Here are five stocks from the final 19:

Omega Protein Corporation ( OME ) : This nutrition products supplier, with a special focus in fish meal products, currently holds a Zacks Rank #1 and witnessed a 3.8% improvement in its current year consensus estimate in the last 60 days.

NTT DOCOMO, Inc. ( DCM ) : This mobile communications services provider, which carries a Zacks Rank #2, witnessed a 10.8% improvement in its current year consensus estimate in the last 60 days.

Amphastar Pharmaceuticals, Inc. ( AMPH ) : This special pharmaceutical company, which sports a Zacks Rank #1, witnessed a strong improvement in its current-year consensus estimate in the last 60 days to earnings of 5 cents per share from a loss of 6 cents .

Comfort Systems USA Inc. ( FIX ) : This general contracting services provider holds a Zacks Rank #2 and witnessed a 7.7% improvement in its current year consensus estimate in last 60 days.

Universal Forest Products Inc. ( UFPI ) : This wood and wood-alternative product manufacturer currently carries a Zacks Rank #2 and its long-term expected earnings growth rate is 10%, higher than industry average of 5.8%.

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The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

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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.

Disclosure: Performance information for Zacks' portfolios and strategies are available at: https://www.zacks.com/performance.

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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. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112

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

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

OMEGA PROTEIN (OME): Free Stock Analysis Report

NTT DOCOMO -ADR (DCM): Free Stock Analysis Report

AMPHASTAR PHARM (AMPH): Free Stock Analysis Report

COMFORT SYSTEMS (FIX): Free Stock Analysis Report

UNIVL FST PRODS (UFPI): 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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