Buy These 5 Low-Leverage Stocks as Softness in Software Remains a Drag

All three major U.S. stock market indices closed slightly higher on Feb. 17, 2026, even as persistent declines in software equities tempered investor optimism following a softer-than-expected Consumer Price Index reading and a stronger-than-anticipated jobs report released recently.

While this might entice some investors to remain tethered to the equity market, concerns surrounding the possibility of artificial intelligence (AI) tools replacing industry-specific software providers might continue to keep growth-oriented technology stocks under pressure in the near term.

This backdrop often reinforces the appeal of low-leverage safe havens, as the current uncertain market situation might cause investors to favor financial resilience and capital preservation over aggressive expansion. So, we recommend stocks, such as Orion Group ORN, Copa Holdings CPA, Coeur Mining (CDE, Tim S.A. TIMB and Evercore EVR, as these carry low leverage and may, therefore, offer a safer option for investors seeking stability during periods of market turmoil.

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

What’s the Significance of Low-Leverage Stocks?

In finance, leverage refers to the practice of borrowing capital to help companies run their operations smoothly and expand their business. 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 financing over equity financing.

Debt financing has its share of drawbacks. It is desirable only as long as it successfully generates a higher rate of return compared to the interest rate. To avoid considerable losses in your portfolio, it is advisable to avoid companies that rely excessively on 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. As an investor, if you want to avoid significant losses, we suggest focusing on stocks with low leverage, which are generally less risky.

To identify such stocks, several leverage ratios have historically been developed to measure the amount of debt a company carries. The debt-to-equity ratio is among the most widely used financial 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 fourth-quarter 2025 earnings season in its midlap, investors should focus on stocks that have demonstrated solid earnings growth in recent periods.

If a stock carries a high debt-to-equity ratio during an economic downturn, its seemingly strong earnings could quickly turn into a nightmare.

The Winning Strategy

Considering the aforementioned factors, it would be 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 select stocks with the potential to provide steady returns, we have expanded our screening criteria to include additional factors.

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 expectations.

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 19 stocks that made it through the screen.

Orion Group: It is a construction company that provides services on and off the water primarily in the continental United States, Alaska, Canada and the Caribbean Basin. On Feb. 4, 2026, Orion Group announced that it has acquired J. E. McAmis, Inc. and JEM Marine Leasing LLC, for approximately $60 million, net of cash acquired. 

This buyout should strengthen Orion’s marine construction business, considering J.E. McAmis’ proven track record in delivering complex marine construction projects under challenging circumstances, with work spanning jetty and breakwater construction, dredging, environmental restoration, and dam and spillway construction. 

The Zacks Consensus Estimate for ORN’s 2026 sales indicates an improvement of 7% from the prior-year estimated level. The Zacks Consensus Estimate for ORN’s 2026 earnings indicates an improvement of 63.6% from the prior-year projected bottom line. It currently holds a Zacks Rank #2.

Copa Holdings: It offers airline passenger and cargo services. On Feb. 11, 2026, the company reported fourth-quarter and full-year 2025 results. Its fourth-quarter operating revenues surged 9.6% on a year-over-year basis, while its earnings per share (EPS) increased 5.3%. 

The Zacks Consensus Estimate for CPA’s 2026 revenues indicates an improvement of 11.5% from the prior-year reported actuals. The stock boasts a long-term (three-to-five years) earnings growth rate of 8.20%. CPA currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Coeur Mining: It is a precious metal mining company. On Feb. 17, 2026, the company reported its 2025 year-end mineral reserves and resources. CDE’s proven and probable mineral reserves in 2025 increased to 4.4 million ounces of gold and 274.4 million ounces of silver. Its measured and indicated mineral resources totaled 3.1 million ounces of gold, 172.0 million ounces of silver, 1,234 million pounds of zinc and 685.5 million pounds of lead at the end of last year.

The Zacks Consensus Estimate for CDE’s 2026 revenues indicates an improvement of 30.2% from the prior-year estimated number. The Zacks Consensus Estimate for CDE’s 2026 earnings indicates an improvement of 143.3% from the prior-year expected figure. The stock currently sports a Zacks Rank #1.

Tim S.A.: It provides commercial banking services. On Feb. 11, 2026, the company announced that it will acquire 51% of the total capital stock of I-Systems Soluções de Infraestrutura S.A. ("I-Systems") for approximately $180 million. I-Systems operates in the neutral fiber optic network sector in the Brazilian market, offering independent infrastructure for the wholesale segment. This transaction reflects TIM's strategy to expand in the broadband segment, and thereby enhance its customer base and revenues. 

The Zacks Consensus Estimate for TIMB’s 2026 revenues indicates an improvement of 10.3% from the prior-year reported actuals. The stock boasts a long-term earnings growth rate of 20.8%. It currently carries a Zacks Rank #2.

Evercore: It is a premier global independent investment banking advisory firm. On Feb. 4, 2026, the company reported fourth-quarter and full-year 2025 results. Its fourth-quarter revenues surged 32% year over year, while adjusted EPS rallied 50%.

The Zacks Consensus Estimate for EVR’s 2026 revenues suggests an improvement of 22.6% from the year-ago reported level. The stock boasts a long-term earnings growth rate of 33.9%. It currently carries a Zacks Rank #2.

You can get the remaining stocks on this list by signing up now for your two-week free trial to the Research Wizard and start using this screen in your trading.

Further, you can create your strategies and backtest them first before taking the investment plunge.

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This article originally published on Zacks Investment Research (zacks.com).

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