5 Low-Leverage Stocks to Watch Ahead of a Possible September Rate Cut

U.S. markets surged over 1.5% on August 22, 2025, following Federal Reserve Chair Jerome Powell's indication of a potential September interest rate cut, which significantly boosted investor optimism. Amid this positive yet potentially volatile outlook, the article recommends a focus on low-leverage stocks as safer investment options. Five specific companies—NatWest, Sterling Infrastructure, Luxfer Holdings, Evercore, and Hillman Solutions—are highlighted for their strong recent earnings growth, favorable Zacks Ranks, and low debt profiles, positioning them as attractive choices for investors seeking stability and potential returns in the current environment.

Analysis

U.S. equity markets experienced a significant rally, with major indices rising over 1.5% on August 22, 2025, following commentary from Federal Reserve Chair Jerome Powell that signaled a potential interest rate cut in September. This dovish signal has catalyzed broad investor optimism. In this environment, the recommended strategy is to focus on companies with low leverage, defined by a debt-to-equity ratio below their industry median, as a defensive measure against potential market volatility. Five specific companies are identified as fitting this profile: NatWest (NWG), Sterling Infrastructure (STRL), Luxfer Holdings (LXFR), Evercore (EVR), and Hillman Solutions (HLMN). These firms are not only noted for their strong balance sheets but also for robust recent performance and positive outlooks. For instance, in Q2 2025, Sterling Infrastructure reported a 40.8% year-over-year surge in EPS, while Evercore's earnings grew 30.4%. Furthermore, forward-looking consensus estimates project strong full-year 2025 growth, with Evercore's earnings expected to increase 31.7% and Sterling's by 45.9%. The investment case for these names is further supported by their Zacks Rank #2 (Buy) rating, indicating a favorable outlook based on the source's screening criteria.

Key Decisions for Investors

• Given the market's positive reaction to potential Fed easing, investors could consider increasing equity exposure but should prioritize companies with low leverage and strong fundamentals to hedge against underlying volatility.
• Evaluate the specific companies highlighted, particularly Sterling Infrastructure (STRL) and Evercore (EVR), which reported standout Q2 2025 earnings growth of 40.8% and 30.4% respectively, as these may offer a compelling combination of growth and balance sheet stability.
• Investors should closely monitor upcoming economic data and Federal Reserve communications, as the current bullish market sentiment is highly dependent on the signaled September rate cut materializing as expected.