4 Stocks With High Coverage Ratios Offer Safer Bets Going Into 2026

Core Insights - Investors should not rely solely on headline sales or earnings to assess a company's performance, especially in a challenging economic environment leading up to 2026 [1][2] - The interest coverage ratio is a critical indicator of a company's financial stability, reflecting its ability to service debt and sustain operations [2][5] Interest Coverage Ratio - The interest coverage ratio measures how effectively a company can pay interest charges on its debt, calculated as Earnings before Interest & Taxes (EBIT) divided by Interest Expense [4][5] - A higher interest coverage ratio indicates a stronger capacity to meet interest obligations, while a ratio below 1 suggests potential default risks [6][7] - Companies with high interest coverage ratios, such as Life Time Group Holdings, Cardinal Health, LeMaitre Vascular, and Flowserve, demonstrate better debt-servicing abilities [3][10] Company Performance - Life Time Group Holdings (LTH) has a projected sales growth of 13.8% and EPS growth of 57.9% for the current financial year, with shares rising 16.5% over the past year [12] - Cardinal Health (CAH) shows projected sales growth of 16.2% and EPS growth of 19.7%, with a significant stock increase of 73.3% in the past year [13] - LeMaitre Vascular (LMAT) anticipates sales growth of 12.9% and EPS growth of 30.1%, although its stock has declined by 21.3% in the past year [14] - Flowserve Corporation (FLS) expects sales growth of 4.6% and EPS growth of 31.9%, with a stock increase of 17.2% over the past year [15] Investment Strategy - A successful investment strategy should include stocks with an interest coverage ratio above the industry average, a favorable Zacks Rank, and a VGM Score of A or B [8][9]