4 Stocks With Solid Interest Coverage to Navigate the 2026 Market

Market Overview - Equity markets showed caution as major U.S. indices retreated from recent highs, with the Dow Jones Industrial Average down 249.04 points (0.51%) to 48,461.93, the S&P 500 down 24.20 points (0.35%) to 6,905.74, and the Nasdaq Composite down 118.75 points (0.50%) to 23,474.35 [1] - The commodities sector reflected this volatility, particularly in precious metals, where gold and silver experienced a sharp pullback [2] Interest Coverage Ratio - The interest coverage ratio is crucial for assessing a company's ability to meet its debt obligations, with a higher ratio indicating better financial health [3][6] - Companies with a strong interest coverage ratio, such as Stride, Inc. (LRN), Brinker International, Inc. (EAT), Amazon.com, Inc. (AMZN), and Cardinal Health, Inc. (CAH), are positioned well for 2026 [5][11] - A ratio below 1 indicates potential default risk, while a higher ratio suggests a company can withstand financial hardships [9] Company Performance and Projections - Stride, Inc. is projected to see EPS and sales growth of 3.1% and 4.6%, respectively, despite a 35.9% stock drop this year [11] - Cardinal Health's EPS and sales are expected to grow 19.7% and 16.2%, with the stock up 75.3% in 2025 [11][17] - Brinker International anticipates sales and EPS growth of 6.5% and 14.9%, respectively, with an 8.3% stock increase over the past year [15] - Amazon's sales and EPS are projected to grow 11.9% and 29.7%, respectively, with a 5.8% stock rise in the past year [16] 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 [10][12] - Stocks that meet these criteria are likely to outperform in various market conditions [13]