Buy These 5 Low-Leverage Stocks Amid Fresh Iran-Israel War

Amid recent market declines following escalating geopolitical tensions between Iran and Israel, Zacks Investment Research suggests investors consider low-leverage stocks to mitigate risk. The article highlights five stocks—Novartis (NVS), The Ensign Group (ENSG), MasTec (MTZ), Bilibili (BILI), and Sterling Infrastructure, Inc. (STRL)—selected for their low debt-to-equity ratios, favorable Zacks Ranks, and VGM Scores, indicating potential for steady returns even during economic uncertainty; each has demonstrated solid recent earnings or growth expectations.

Analysis

Recent geopolitical escalations, specifically missile strikes between Israel and Iran on June 13, triggered a significant market downturn with major U.S. indices falling over 1%, highlighting investor apprehension regarding potential oil price spikes and broader commodity inflation. In this volatile environment, a defensive investment strategy focusing on companies with low leverage is proposed. The selection methodology prioritizes stocks with debt-to-equity ratios below their industry medians, current prices above $10, substantial trading volumes (average 20-day volume >= 50,000), superior earnings per share (EPS) growth compared to industry peers, strong VGM Scores (A or B), estimated one-year EPS growth exceeding 5%, and a Zacks Rank of #1 (Strong Buy) or #2 (Buy). Five companies meeting these criteria are highlighted: Novartis (NVS) reported encouraging Phase IIIB data for Fabhalta, with a 7.1% projected 2025 sales improvement and a 7.9% long-term earnings growth rate. The Ensign Group (ENSG) expanded its operations by acquiring three skilled nursing facilities, with 2025 sales projected to grow 15% and a 15% long-term earnings growth rate. MasTec (MTZ) announced a 6% year-over-year revenue increase in Q1 2025 and an improved adjusted EBITDA margin, with 2025 sales and earnings expected to grow 11% and 53.7%, respectively. Bilibili (BILI) posted a 24% year-over-year revenue increase and a 58% gross profit improvement in Q1 2025, with 2025 sales projected up 11.3% and a significant EPS turnaround expected. Sterling Infrastructure (STRL) reported a 7% Q1 2025 revenue increase and a 29% surge in adjusted EPS, boasting a 15% long-term earnings growth rate. All five companies currently hold a Zacks Rank #2, indicating a 'Buy' recommendation, and exhibit strong individual positive sentiment scores ranging from 0.7 to 0.85.

Key Decisions for Investors

• Investors should consider reallocating a portion of their portfolio toward low-leverage stocks such as NVS, ENSG, MTZ, BILI, and STRL to potentially mitigate downside risk amid heightened geopolitical tensions and market volatility.
• Evaluate these selected companies based on their strong fundamentals, including positive earnings revisions, solid growth projections, and favorable Zacks Ranks, as well as their capacity for resilience during economic uncertainty due to lower debt burdens.
• Continue to monitor geopolitical developments and their impact on oil prices and overall market sentiment, as sustained instability could further underscore the attractiveness of financially conservative investments.
• For portfolios seeking a blend of defensive characteristics and growth potential, these identified stocks offer a compelling consideration, given their specific catalysts such as NVS's drug development, ENSG's acquisitions, MTZ's infrastructure projects, BILI's revenue growth, and STRL's consistent earnings performance.