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Zacks.com featured highlights: Norbord, Huntington Ingalls, Lam Research, Patrick Industries, SK Telecom and Citizens Financial

RLI Corp. (RLI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

For Immediate Release

 

Chicago, IL – December 13, 2017 - Stocks in this week’s article Norbord Inc. OSB, Huntington Ingalls Industries, Inc. HII, Lam Research Corporation LRCX, Patrick Industries Inc. PATK, SK Telecom Co., Ltd. SKM and Citizens Financial Group, Inc. CFG.

5 Low Leverage Stocks to Withstand Interest Rate Hike

Leverage, in particular financial leverage, is the amount of debt that an entity uses to buy more assets. In corporate finance, debt financing is a well-known term, which is used as a tool by companies to ensure smooth business operations. Since companies have limited funds, they need exogenous funding to boost their financial resources from time to time for expansion of operations.

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Even with the option for equity financing, companies prefer borrowing funds as these are easily and cheaply available. Moreover, using financial leverage rather than acquiring more equity capital is favored as equity financing reduces the earnings per share of existing shareholders.

Yet the word “debt” is unnerving for many.  This is because while debt brings with it the capacity to spend a little bit more, it also carries the burden of repayment with additional interest in the future.  In fact, the related amount of interest expense may overwhelm the borrower if it does not earn sufficient returns to offset the interest expense. This is a particular problem when interest rates rise or the returns from assets decline.

Also when the amount of debt a company bears becomes exorbitant, it poses greater risk. In fact, companies with high debt loads are more vulnerable during economic downturns and can even go bankrupt.

Considering this and the fact that analysts are currently estimating a hike in U.S. interest rates at the upcoming Fed meet this month, investors may feel shaky. Nevertheless, this does not indicate that one should totally dissuade from equity investment.

What investors need now is to choose stocks prudently, avoiding those with high debt loads. So the crux of safe investment lies in identifying low leverage stocks.

And here comes the importance of leverage ratios, which have been constructed historically to safeguard investors from becoming victims of debt trap. Debt-to-equity ratio is one such measure, perhaps the most popular one, to evaluate a company’s credit worthiness, for potential equity investments.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/285558/5-low-leverage-stocks-to-withstand-interest-rate-hikes

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

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Contact: Jim Giaquinto

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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/performancefor information about the performance numbers displayed in this press release.q


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Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
Norbord Inc. (OSB) : Free Stock Analysis Report
 
Citizens Financial Group, Inc. (CFG) : Free Stock Analysis Report
 
SK Telecom Co., Ltd. (SKM) : Free Stock Analysis Report
 
Lam Research Corporation (LRCX) : Free Stock Analysis Report
 
Patrick Industries, Inc. (PATK) : Free Stock Analysis Report
 
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