4 Solid Interest Coverage Stocks to Buy Even as Rate-Hike Fears Ease

September nonfarm payrolls rose 29,000 and unemployment edged up to 4.2% from 4.1%, easing near-term rate-hike concerns; the Dow gained 0.49%, the S&P 500 0.73% and the Nasdaq 1.19%. The article highlights four stocks with interest coverage above their industry medians and Zacks Rank #2: L.B. Foster, Clean Harbors, Brinker International and Mueller Water Products. Current-year consensus EPS growth estimates range from 16.8% for Mueller to 134.8% for L.B. Foster; the article gives no specific interest-coverage ratios.

Analysis

The screen’s weak link is its use of interest coverage as a forward-looking safety signal: coverage is backward-looking EBIT divided by interest expense, so it can look comfortable just before a cyclical earnings downturn, and it says little about debt maturities or refinancing terms. If labor weakness translates into slower demand, EAT faces a more immediate earnings-revision risk than the infrastructure-oriented names; restaurant discounting could also pressure margins. Its sharp prior run leaves less room for estimates to disappoint. FSTR’s projected EPS surge warrants checking the base period, backlog conversion, and absolute earnings before treating it as durable growth; a screen rank is not confirmation. CLH and MWA may offer comparatively resilient end-market exposure, but both still need operating and valuation diligence. For MWA, municipal project timing and customer budgets matter more than a small near-term shift in rate expectations; lower yields would be supportive only if they translate into funded projects. Over days, softer labor data may lift rate-sensitive equities, but one report does not establish a durable policy pivot. Over 1–3 months, watch revisions, margins, and guidance; over 6–18 months, the key test is whether infrastructure demand converts into cash flow. Contrarian point: the article frames easing rate fears as a broad tailwind, while the more material risk is earnings sensitivity and how much optimism is already reflected in prices. No basket trade is justified from the supplied data alone.

Key Decisions for Investors

• Avoid buying all four as a rate-relief basket. Before any position, verify each company’s current interest coverage, debt maturity schedule, and cash-flow conversion; the article provides no ratios or refinancing detail.
• Keep CLH on a conditional long watchlist: consider entry on market weakness only if upcoming results sustain operating performance and guidance. Reassess if margins or earnings estimates turn down; do not rely on the screen rank as a catalyst.
• Treat FSTR as a confirmation trade, not an EPS-growth headline trade: check the comparison-period base, backlog/orders, and cash conversion first. A failure to convert backlog or downward estimate revisions would invalidate the growth case.
• Do not chase EAT after its substantial reported run. Track comparable sales, traffic, labor/input costs, and guidance; weakening traffic or margin commentary would strengthen the downside case.
• For MWA, monitor order activity and customer/project funding alongside estimates. A sustained improvement in orders and guidance would support reconsideration; rate expectations easing alone is insufficient.