Buy These 5 Low-Leverage Stocks Amid Impressive Retail Sales Data

U.S. equity markets advanced on July 17, 2025, driven by a 0.6% rebound in June retail sales, falling unemployment claims, and robust earnings from major tech firms like Netflix. Amid this positive sentiment, the article advises a defensive investment posture, recommending low-leverage stocks—characterized by low debt-to-equity ratios—as a hedge against potential economic downturns. Specific companies identified through a multi-factor screening process include Novartis (NVS), which reported Q2 2025 net sales up 12% and EPS up 29%, along with ResMed (RMD), Wabtec (WAB), Elbit Systems (ESLT), and Ingredion (INGR), all noted for strong fundamentals and growth prospects.

Analysis

U.S. equity markets on July 17, 2025, responded positively to a confluence of favorable economic data and corporate earnings. Key drivers included a 0.6% rebound in June retail sales, which surpassed expectations after a 0.9% decline in May, coupled with a reported drop in unemployment claims. Investor confidence was further bolstered by strong earnings from large-cap technology firms, with Netflix being cited as a specific example. Despite this optimistic market sentiment, the analysis posits a cautious outlook, highlighting underlying market edginess and advocating for a defensive investment strategy. This strategy centers on identifying companies with low leverage, specifically a debt-to-equity ratio below their industry median, to mitigate risks associated with a potential economic crisis. The report identifies five such companies that also exhibit strong growth fundamentals: Novartis (NVS) reported robust Q2 2025 results with a 12% year-over-year increase in net sales and a 29% rise in EPS. Elbit Systems (ESLT) is projected to grow 2025 sales by 13.8% and has a four-quarter average earnings surprise of 21.12%. Wabtec (WAB), ResMed (RMD), and Ingredion (INGR) are also highlighted for positive catalysts, including strategic agreements, favorable consensus earnings estimates, and long-term earnings growth rates projected at 16%, 15.3%, and 11% respectively.

Key Decisions for Investors

• Given the contrast between positive short-term economic signals and underlying market fragility, investors should consider prioritizing companies with low-leverage balance sheets as a defensive measure.
• The five identified stocks—NVS, RMD, WAB, ESLT, and INGR—warrant consideration for portfolios seeking growth with a protective cushion, based on their combination of financial health and specific catalysts like NVS's 29% EPS growth and ESLT's 13.8% projected sales improvement.
• Monitor the debt-to-equity ratios across existing holdings, as highly leveraged companies may be vulnerable to a downturn even if they are currently reporting strong earnings.
• For new positions, apply the multi-factor screen outlined, which combines low leverage with criteria such as strong earnings growth relative to industry peers and positive forward-looking estimates, to identify potentially resilient investments.