All major U.S. stock indices dipped a little less than 1% on Aug. 5, 2025, following a weaker-than-expected services data release. Meanwhile, the tariff rollercoaster continued to impact the overall stock market optimism, with Trump threatening to slap another set of tariffs, this time as high as 250% on pharmaceuticals. In particular, the tariff-induced uncertainty washed away the majority of the market gains obtained from the latest wave of corporate earnings, which beat estimates from multiple companies.

Amid such uncertainties, stakeholders might not feel confident enough to invest in the U.S. stock market right now. However, a prudent investor knows that such low prices offer a perfect time to make an entry in equity markets. To avoid big-time losses, one may go for safe-bet stocks like NatWest Group ((NWG Quick QuoteNWG - Free Report) ), Zions Bancorporation ((ZION Quick QuoteZION - Free Report) ), Luxfer Holdings ((LXFR Quick QuoteLXFR - Free Report) ), Kingstone Companies ((KINS Quick QuoteKINS - Free Report) ) and Ingredion Inc. ((INGR Quick QuoteINGR - Free Report) ) that are less leveraged and thus likely to provide a protective cushion against a sudden economic crisis.

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 in its mid-way, 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 13 stocks that made it through the screen.

NatWest Group: It operates as a banking and financial services company. On July 31, 2025, NatWest Group announced that it is working with Google Cloud as part of a collaboration that supports the bank’s strategic focus on helping businesses to grow and adapt to the rapid pace of technological change. This should bolster NWG’s growth amid rapidly expanding usage of AI tools across diverse businesses.

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 (three-to-five years) earnings growth rate of 10.9%. It currently has a Zacks Rank #2.

Zions Bancorporation: It is a diversified financial service provider, operating a widespread network of more than 400 branches. On July 21, 2025, ZION announced its second-quarter 2025 results. Its net interest income surged 9% year over year, while its average interest-earning assets went up 2%.

The Zacks Consensus Estimate for ZION’s 2025 earnings suggests a year-over-year improvement of 5%. The stock boasts a long-term earnings growth rate of 6.6%. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luxfer: It is a materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders. On July 29, 2025, LXFR released its second-quarter 2025 results. Its adjusted net sales improved 5.8% year over year, while its adjusted earnings per share surged a solid 25%.

LXFR boasts a solid long-term earnings growth rate of 8%. The Zacks Consensus Estimate for Luxfer’s 2025 sales suggests a year-over-year improvement of 1.1%. It currently carries a Zacks Rank #2.

Kingstone Companies: It is a property and casualty insurance holding company. On July 22, 2025, KINS declared a quarterly cash dividend on its common stock for the first time since the third quarter of 2022. This reflects the company’s healthy financial strength, driven by strong underwriting results and the generation of significant cash flows from operations over the past two years.

The Zacks Consensus Estimate for KINS’ 2025 sales indicates an improvement of 37.9% from the 2024 reported actuals. The Zacks Consensus Estimate for 2025 earnings also indicates an improvement of 37.9% from the 2024 reported figure. It currently holds a Zacks Rank #2.

Ingredion: It is an ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. On Aug. 1, 2025, INGR delivered second-quarter 2025 results. Its adjusted operating income increased 1% year over year. Segment-wise, its Texture & Healthful Solutions segment delivered 2% net sales growth, driven by sales volume growth, especially for clean label solutions.

INGR boasts a long-term earnings growth rate of 11%. The Zacks Consensus Estimate for 2025 sales indicates an improvement of 1% from the 2024 reported actuals. It currently carries 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.