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Zacks.com featured highlights Packaging Corporation of America, Valero Energy, Chubb, Host Hotels & Resorts and Ryder Systems

For Immediate Release

Chicago, IL – June 15, 2022 – Stocks in this week’s article are Packaging Corporation of America PKG, Valero Energy VLO, Chubb Ltd CB, Host Hotels & Resorts HST and Ryder Systems R.

5 Low-Leverage Stocks to Buy as Possibility of Recession Rises

Wall Street started this week on a dismal note, with fears of a possible recession looming large among investors as the Federal Reserve scrambled to get inflation under control.

No doubt investors are shaky as a further drop in share prices may result in huge losses. However, experts suggest that this is the right time to buy some stocks as their prices are low and they are thus affordable. Stocks like Packaging Corporation of America, Valero Energy, Chubb Ltd, Host Hotels & Resortsand Ryder Systemsbear low leverage and therefore can shield investors from incurring losses.

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Now, before selecting low leverage stocks one must be aware of what leverage is and how choosing a low leverage stock helps investors.

In finance, leverage is a term used to denote the practice of borrowing capital by companies to run their operations smoothly and expand the same. 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 exorbitant debt financing.

Therefore, 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.

Such an event shows how volatile the equity market can be at times and as an investor if you don't want to lose big time, we suggest you invest in stocks, which 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 and 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 first-quarter earnings cycle behind us, 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 aforementioned factors, 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.

Excluding stocks that have a negative or a zero debt-to-equity ratio, here we present our five picks out of the 32 stocks that made it through the screen.

Packaging Corp.:It is the third-largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. In May 2022, Packaging Corporation revealed that it intends to increase the quarterly cash dividend on its common stock to an annual payout of $5.00 per share from $4.00 per share, reflecting a 25% increase.

PKG delivered an earnings surprise of 19.55%, on average, in the trailing four quarters. It sports a Zacks Rank #1 currently. The Zacks Consensus Estimate for 2022 earnings has moved up 8.2% in the past 60 days.

Valero Energy: It is the largest independent refiner and marketer of petroleum products in the United States. In June 2022, Valero declared that the company has reduced its debt by approximately $300 million through the acquisition of $300 million of 4% Gulf Opportunity Zone Revenue Bonds Series 2010.

VLO currently sports a Zacks Rank #1. The company delivered an earnings surprise of 84.26% in the trailing four quarters, on average. The Zacks Consensus Estimate for 2022 earnings has moved up 87.4% in the past 60 days.

Chubb: It is one of the world's largest providers of property and casualty (P&C) insurance and reinsurance and the largest publicly traded P&C insurer, based on market capitalization of $56.9 billion. In May 2022, the company's shareholders approved a 3.75% increase in its dividend to $3.32 per share annually from $3.20 per share. This marked the twenty-ninth consecutive annual increase in the company's dividend.

CB carries a Zacks Rank #2 and delivered an earnings surprise of 13.45%, on average, in the trailing four quarters. The Zacks Consensus Estimate for 2022 earnings has moved up 2.7% in the past 60 days. You can see the complete list of today's Zacks #1 Rank stocks here.

Host Hotels & Resorts: It is one of the leading lodging real estate investment trusts (REITs), which engages in the ownership, acquisition, and redevelopment of luxury and upper-upscale hotels in the United States and abroad. In May 2022, the company announced a 100% increment in its quarterly cash dividend to 6 cents.

Currently, HST has a Zacks Rank of 2 and delivered an earnings surprise of 93.53%, on average, in the trailing four quarters The Zacks Consensus Estimate for 2022 earnings has improved 24.2% over the past 60 days.

Ryder Systems: It is recognized as one of the world's largest providers of integrated logistics and transportation solutions. In June 2022, the company at its Investor Day increased its second-quarter as well as full-year 2022 GAAP EPS forecast.

R currently has a Zacks Rank #2. It delivered a four-quarter earnings surprise of 48.24%, on average. The consensus estimate for 2022 earnings has improved 22.9% over the past 60 days.

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1938535/5-low-leverage-stocks-to-buy-as-possibility-of-recession-rises

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.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine.  But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.

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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.Contact: Jim Giaquinto

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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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