Bet on These 5 Low-Leverage Stocks Amid Rising Treasury Yields
Discover how focusing on low-leverage stocks like NVIDIA and NatWest Group can shield your portfolio from rising Treasury yields, offering steady returns and reduced financial risk in volatile markets.
Key Takeaways
- Low-leverage stocks carry less financial risk amid rising Treasury yields.
- All five recommended stocks have Zacks Rank #2, signaling solid performance.
- Strong earnings growth estimates support steady returns in volatile markets.
- Debt-to-equity ratio is a key metric to identify financially stable companies.
- Investing in low-leverage stocks can protect portfolios during economic uncertainty.
When Treasury yields climb, borrowing costs rise across the economy, squeezing companies that lean heavily on debt. This scenario often triggers jitters among investors, leading to market dips—as seen on September 3, 2025, when all three major U.S. stock indices slipped amid tariff worries and inflation fears. Yet, amid this turbulence, savvy investors spot opportunity in low-leverage stocks—companies with less debt relative to equity—offering a safer harbor in choppy waters. This article unpacks why low-leverage stocks matter now, highlights five standout picks like NVIDIA and NatWest Group, and reveals how to spot these financial gems using key ratios and performance signals.
Understanding Leverage Risks
Leverage is like a double-edged sword—borrowed money can fuel growth, but it can also magnify losses. When Treasury yields rise, the cost of servicing debt climbs, squeezing companies that rely heavily on borrowing. Imagine a business juggling flaming torches; add rising interest rates, and the risk of dropping one grows. Companies with high debt-to-equity ratios face heavier interest bills, which can erode profits and even threaten solvency. Conversely, low-leverage firms carry lighter debt loads, making them more financially stable and less sensitive to rate hikes. This stability translates to steadier earnings and less risk of distress, a comforting thought for investors navigating uncertain markets. So, while borrowing can boost returns in good times, it’s the low-leverage players that often survive the storm.
Decoding Debt-to-Equity Ratio
The debt-to-equity ratio is the financial heartbeat revealing how much a company owes compared to what shareholders own. Picture it as a seesaw balancing liabilities on one side and equity on the other. A lower ratio means the company isn’t weighed down by debt, signaling better solvency and less risk. For investors, this ratio is a handy compass pointing toward safer bets, especially when borrowing costs rise. But beware—no company is entirely debt-free; the goal is to find those with manageable levels. In 2025, screening for stocks with debt-to-equity ratios below their industry median, combined with strong earnings growth and trading volume, helps identify resilient companies ready to weather economic headwinds.
Spotlighting Five Low-Leverage Winners
Among the low-leverage stars shining in 2025, NVIDIA Corp. leads with a debt-light balance sheet and explosive growth—its fiscal Q2 revenues soared 56% year over year to $46.7 billion, with EPS jumping 61%. Sterling Infrastructure, fresh off acquiring a specialty contractor, shows a 45.9% earnings improvement, signaling robust expansion without heavy debt. Northern Trust’s selection by New Mexico’s $18.5 billion fund boosts recurring revenues, backed by a solid 10.9% earnings growth estimate. Dorman Products rides a 7.6% sales increase and 23% EPS surge, proving steady aftermarket demand. Lastly, NatWest Group’s role in financing UK infrastructure upgrades underscores its stable position, with a 20.1% sales growth forecast. Each carries a Zacks Rank #2 and low debt-to-equity ratios, making them prudent picks amid rising Treasury yields.
Navigating Market Volatility
September 3, 2025, was a reminder that markets can wobble when tariffs rise and inflation fears mount. Investors often panic, selling off stocks en masse. But this turbulence is where low-leverage stocks shine. Their lighter debt loads mean they’re less likely to stumble under pressure, offering a steadier ride. Think of them as sturdy ships in a stormy sea, less prone to capsizing. While high-leverage firms might promise dazzling returns in calm waters, they risk sinking when the waves hit. For cautious investors, focusing on companies with manageable debt and strong earnings growth provides a buffer against volatility, preserving capital and peace of mind.
Crafting a Low-Leverage Strategy
Choosing low-leverage stocks isn’t just about avoiding debt; it’s about blending financial prudence with growth potential. Screening criteria matter: look for debt-to-equity ratios below industry medians, stocks trading above $10 for liquidity, and solid earnings growth forecasts. The Zacks Rank #2 signals a history of solid performance, while a VGM Score of A or B adds confidence. Diversify across sectors to spread risk—technology, infrastructure, finance, and consumer staples all offer low-leverage gems. Remember, low leverage often means steadier but sometimes slower growth, so balance your portfolio with your risk appetite. In a world of rising Treasury yields, this strategy offers a thoughtful path to steady returns without the heartburn of excessive debt.
Long Story Short
Low-leverage stocks stand out as financial lifeboats when Treasury yields rise and market uncertainty looms. Their lower debt burdens mean less vulnerability to rising interest costs and more predictable earnings, shielding investors from sudden shocks. The five stocks spotlighted—NVIDIA, Sterling Infrastructure, Northern Trust, Dorman Products, and NatWest Group—each combine low debt-to-equity ratios with strong earnings growth and solid Zacks rankings, making them prudent choices for steady returns. As markets twist and turn, anchoring your portfolio with such resilient companies can preserve capital and ease anxiety. Remember, the key lies in balancing risk with opportunity—choose wisely, and your investments can weather the storm.