5 Low-Leverage Stocks to Buy Amid the Focus on Inflation Data

Market Overview - The majority of U.S. stock indices ended lower on November 12 due to rising U.S. treasury yields, which created headwinds for the recent equities rally following the election results [1] - Investors are concerned about upcoming U.S. inflation data, contributing to the dismal performance of the stock market [1] Investment Recommendations - In the current market environment, it is suggested that investors consider low-leverage stocks as safer investment options [2] - Recommended stocks include Janus Henderson Group (JHG), Coastal Financial (CCB), Novartis (NVS), Apogee Enterprises (APOG), and InterDigital (IDCC), all of which bear low leverage [2] Understanding Leverage - Leverage refers to the practice of companies borrowing capital to operate and expand, typically through debt financing [4] - Excessive debt financing can lead to significant losses, making low-leverage stocks more desirable for risk-averse investors [5] Debt-to-Equity Ratio - The debt-to-equity ratio is a key metric used to assess a company's financial risk, with a lower ratio indicating better solvency [7] - High debt-to-equity ratios can turn positive earnings into negative outcomes during economic downturns [8] Stock Selection Criteria - Stocks should have a debt-to-equity ratio lower than the industry median, a current price of at least $10, and an average 20-day trading volume of at least 50,000 [10][11] - Additional criteria include earnings growth expectations greater than 5% and a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [12] Company Highlights - Janus Henderson Group (JHG): Reported a 6.5% year-over-year increase in adjusted revenues and a 7.1% rise in adjusted earnings per share for Q3 2024, with a long-term earnings growth rate of 22.2% [13][14] - Coastal Financial (CCB): Achieved a return on average assets of 1.34% in Q3 2024, with earnings and sales estimates suggesting improvements of 6.4% and 31.4% respectively for 2024 [15][16] - Novartis (NVS): Received FDA accelerated approval for Scemblix, with a long-term earnings growth rate of 9.1% and a four-quarter average earnings surprise of 2.2% [17][18] - Apogee Enterprises (APOG): Completed the acquisition of UW Interco for $242 million, expecting an incremental net sales contribution of approximately $30 million in fiscal 2025, with a four-quarter average earnings surprise of 19.7% [19][20] - InterDigital (IDCC): Reported Q3 2024 revenues of $128.7 million, exceeding guidance, with a long-term earnings growth rate of 17.4% and a sales estimate suggesting a 56.4% improvement for 2024 [20][21]