Buy These 5 Low-Leverage Stocks as Oil Price Spike Slows Down

All three major U.S. stock market indices surprisingly ended March 4, 2026 in positive territory, despite escalating missile exchanges across the Middle East. While gains in tech leaders buoyed Wall Street, a simultaneous slowdown in the oil price spike provided an additional catalyst for the day's rally.

Against this backdrop, optimists like CNBC’s Jim Cramer’s statement that the oil market's reaction signals the conflict may remain contained may potentially serve as a green light for investors to chase high-growth beta stocks. However, for risk-averse investors, the geopolitical landscape remains too uncertain to abandon caution.

In such times, safety often lies in stability. Companies with low financial leverage—meaning those that carry minimal debt relative to their equity—are typically better equipped to handle economic shocks like the ongoing hostilities in the Middle East. As the market digests the mixed signals from the AI industry and waits for tangible returns on massive capital investments, low-leverage stocks may offer a solid defensive foothold. Therefore, we recommend low-leverage stocks like Everus Construction Group, Inc. ECG, Telefonica Brasil VIV, Laureate Education LAUR, HNI Corp. HNI and Costco Wholesale COST. 

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 final leg, 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 23 stocks that made it through the screen.

Everus Construction Group: It provides contracting services in the United States. On Feb. 24, 2026, Everus Construction Group announced its fourth-quarter 2025 results. The company’s fourth-quarter revenues surged 33.1% to $1.01 billion, while its earnings soared 61.2% on a year-over-year basis.  

The Zacks Consensus Estimate for ECG’s 2026 revenues indicates an improvement of 10.9% from the prior-year estimated level. The Zacks Consensus Estimate for ECG’s 2026 earnings indicates an improvement of 5.3% from the prior-year projected bottom line. It currently sports a Zacks Rank #1.

Telefonica Brasil: It is engaged in providing communication, information and entertainment solutions in the telecommunication sector, in the State of Sao Paulo. On Feb. 23, 2026, the company reported fourth-quarter 2025 results. Its fourth-quarter net operating revenues rose 7.1% on a year-over-year basis, backed by the solid performances of mobile postpaid and FTTH revenues. 

The Zacks Consensus Estimate for VIV’s 2026 revenues indicates an improvement of 12% from the prior-year reported actuals. The stock boasts a long-term (three-to-five years) earnings growth rate of 25.10%. VIV currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Laureate Education: It is a degree-granting higher education institution. On Feb. 19, 2026, the company reported its fourth-quarter 2025 results. Its revenues increased 28% year over year to $541.4 million, while its earnings per share (EPS) improved 88.7%. The company also announced a $150 million increase in its share repurchase authorization.

The Zacks Consensus Estimate for LAUR’s 2026 revenues indicates an improvement of 10.9% from the prior-year estimated number. The Zacks Consensus Estimate for LAUR’s 2026 earnings indicates an improvement of 24.4% from the prior-year expected figure. The stock currently carries a Zacks Rank #2.

HNI Corp.: It is a provider of workplace furnishings. On Feb. 25, 2026, the company announced its fourth-quarter 2025 results.  Its net sales improved 38.3% year over year to $888.4 million, while its adjusted gross profit went up 10 basis points.

The Zacks Consensus Estimate for HNI’s first-quarter 2026 sales indicates an improvement of 3.5% from the prior-year reported actuals. The stock boasts a long-term earnings growth rate of 20%. It currently carries a Zacks Rank #2.

Costco Wholesale: It operates as an international chain of membership warehouses, mainly under the "Costco Wholesale" name, that carry quality, brand-name merchandise at substantially lower prices than are typically found at conventional wholesale or retail sources. On Feb. 4, 2026, the company announced its January sales results, which amounted to $21.33 billion for the four weeks ended Feb. 1, 2026. This sales data reflected an increase of 9.3% from last year. 

The Zacks Consensus Estimate for COST’s fiscal 2026 revenues suggests an improvement of 8% from the year-ago reported level. The stock boasts a long-term earnings growth rate of 10.30%. It currently carries a Zacks Rank #2.

 

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

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