4-Star Stocks Poised to Pop: Annaly Capital Management
Sep 29th 2011 9:52AM
Updated Sep 29th 2011 9:54AM
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, mortgage REIT Annaly Capital Management (NYS: NLY) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Annaly's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||New York (1996)|
|Market Cap||$16.2 billion|
|Trailing-12-Month Revenue||$2.27 billion|
Chairman/CEO Michael Farrell
Vice Chairman/COO Wellington Denahan-Norris
|Return on Equity (Average, Past 3 Years)||12.7%|
Anworth Mortgage Asset (NYS: ANH)
Capstead Mortgage (NYS: CMO)
Redwood Trust (NYS: RWT)
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
Just last week, MugMugMug tapped Annaly as a timely income opportunity:
Helicopter Ben says low interest rates till 2013 which should keep the interest rate spread good for NLY, keeping the [dividend payout] high. ... [T]he economy is looking gloomy and the Fed said no QE proper for now, so this is a bet that the S&P isn't going to take off anytime soon. NLY's ~14% [dividend yield] will slowly whittle my NLY caps cost basis down.
Currently, Annaly even sports a cheapish P/E of 6.2. That represents a discount to other mortgage REITs like Anworth (7.6), Capstead (7.5), and Redwood (15.2).
CAPS member MatthewCHoffman elaborates on the bull case:
This highly leveraged REIT takes (relatively) high interest from mortgages while financing its ownership through a revolving credit facility at lower short term rates. I understand that its investment strategy is very conservative so it picks "safe" mortages. These stocks have a lot of long-run volatility both in price and in dividends but with Fed policy maintaining low interest rates to 2013 this should be a good shelter ... during the downturn for at least a year or two. Even with the current "twist" policy announced by the Fed, which will flatten the yield curve somewhat, the effect on mortgage interest rates is not expected to be great.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Annaly. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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