Bet on These 5 Low-Leverage Stocks Amid Higher Treasury Yields

All three major U.S. stock indices slipped on Sept. 3, 2025, owing to multiple factors, including rising tariff concerns, higher long-term Treasury yields and inflation fears, that might have caused investor uncertainty and the resultant sell-offs.

In such a situation, an investor might not feel confident enough to invest in the stock market. However, a prudent investor knows that this is the right time to buy stocks that are safe bets. To this end, we recommend stocks like NVIDIA Corp. (NVDA), Sterling Infrastructure (STRL), Northern Trust Corp. (NTRS), Dorman Products (DORM) and Natwest Group (NWG). These stocks bear low leverage and, therefore, should be a safer option for investors if they don’t want to lose big in times of market turmoil.

Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock helps investors.

What’s the Significance of Low-Leverage Stocks?

In finance, leverage is a term used to denote the practice of borrowing capital by companies to run their operations smoothly and expand them. Such borrowings are done through debt financing. But there remains an option for equity finance. This is probably due to the cheap and easy availability of debt over equity financing.

However, debt financing has its share of drawbacks. Particularly, it is desirable only as long as it successfully generates a higher rate of return compared to the interest rate. So, to avoid considerable losses in your portfolio, one should always avoid companies that resort to excessive debt financing.

The crux of safe investment lies in choosing a company that is not burdened with debt, as a debt-free stock is almost impossible to find.

The equity market can be volatile at times, and, as an investor, if you don’t want to lose big time, we suggest you invest in stocks that bear low leverage and are, hence, less risky.

To identify such stocks, historically, several leverage ratios have been developed to measure the amount of debt a company bears. The debt-to-equity ratio is one of the most common ratios.

Analyzing Debt/Equity

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

This metric is a liquidity ratio that indicates the amount of financial risk a company bears. A lower debt-to-equity ratio reflects improved solvency for a company.

With the second-quarter 2025 earnings season behind us, investors must be eyeing stocks that have exhibited solid earnings growth in the recent past.

But if a stock bears a high debt-to-equity ratio in times of economic downturn, its so-called booming earnings picture might turn into a nightmare.

The Winning Strategy

Considering the factors above, it is prudent to choose stocks with a low debt-to-equity ratio to ensure steady returns.

Yet, an investment strategy based solely on the debt-to-equity ratio might not fetch the desired outcome. To choose stocks that have the potential to give you steady returns, we have expanded our screening criteria to include some other factors.

Here are the other parameters:

Debt/Equity less than X-Industry Median: 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.

VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.

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

Zacks Rank #1 or 2: Irrespective of market conditions, stocks with a Zacks Rank #1 or 2 have a proven history of success.

Excluding stocks that have a negative or a zero debt-to-equity ratio, here we present our five picks out of the 16 stocks that made it through the screen.

NVIDIA Corp.: It is the worldwide leader in visual computing technologies and the inventor of the graphics processing unit (GPU). On Aug. 27, 2025, Nvidia announced its second-quarter fiscal 2026 results. Its revenues went up 56% year over year to $46.7 billion in the fiscal second quarter, while its earnings per share (EPS) surged a solid 61%.

The Zacks Consensus Estimate for NVDA’s fiscal 2026 revenues suggests an improvement of 56.1% from the fiscal 2025 reported figure. The company boasts a long-term (three-to-five years) earnings growth rate of 32.8%. It currently has a Zacks Rank #2.

Sterling Infrastructure: It operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions, primarily in the United States. On Sept. 2, 2025, STRL announced the completion of the acquisition of Irving, a leading specialty electrical and mechanical contractor. This strategic move positions Sterling Infrastructure for sustained growth and increased value creation for customers and shareholders alike.

The Zacks Consensus Estimate for STRL’s 2025 earnings suggests a year-over-year improvement of 45.9%. The stock boasts a four-quarter average earnings surprise of 12.1%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northern Trust: It is a leading provider of wealth management, asset servicing, asset management and banking solutions to corporations, institutions, families, and individuals. On Aug. 26, 2025, Northern Trust announced that it has been selected by the State of New Mexico Educational Retirement Board to provide asset servicing solutions to the $18.5 billion fund, including custody, accounting, post-trade compliance, performance measurement and advanced support for alternative and derivative investments as well as their financial reporting requirements. This should boost NTRS’ recurring revenues, enhance its market presence and strengthen long-term client relationships.

NTRS boasts a solid four-quarter average earnings surprise of 7.57%. The Zacks Consensus Estimate for its 2025 earnings suggests a year-over-year improvement of 10.9%. It currently carries a Zacks Rank #2.

Dorman Products: It is a leading supplier of dealer-exclusive replacement parts to the motor vehicle aftermarket industry. On Aug. 4, 2025, Dorman Products announced its second-quarter 2025 results. Its net sales went up 7.6% year over year to $541 million in the second quarter, while its adjusted EPS surged a solid 23%.

The Zacks Consensus Estimate for DORM’s 2025 sales indicates an improvement of 7.9% from the 2024 reported actuals. The Zacks Consensus Estimate for 2025 earnings also indicates an improvement of 22.7% from the 2024 reported figure. It currently carries a Zacks Rank #2.

Natwest Group: It operates as a banking and financial services company. On Aug. 22, 2025, NatWest announced that it has joined the debt financing syndicate to fund the essential upgrades and tunnel replacements, ensuring continued water supply for the UK’s largest potable water aqueduct — Haweswater Aqueduct. As a Mandated Lead Arranger, NWG will provide £140 million in lending. This project further reinforced NatWest’s position as the UK’s leading bank for infrastructure financing.

The Zacks Consensus Estimate for NWG’s 2025 sales suggests an improvement of 20.1% from the 2024 reported figure. The company boasts a long-term earnings growth rate of 10.9%. It currently has a Zacks Rank #2.

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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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