4-Star Stocks Poised to Pop: Annaly Capital Management
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.
Annaly facts
Headquarters (Founded) | New York (1996) |
Market Cap | $16.2 billion |
Industry | Mortgage REIT |
Trailing-12-Month Revenue | $2.27 billion |
Management | Chairman/CEO Michael Farrell Vice Chairman/COO Wellington Denahan-Norris |
Return on Equity (Average, Past 3 Years) | 12.7% |
Dividend Yield | 14.4% |
Competitors | 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.
On CAPS, 91% of the 2,335 members who have rated Annaly believe the stock will outperform the S&P 500 going forward. These bulls include MugMugMug and MatthewCHoffman.
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.
What do you think about Annaly, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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At the time thisarticle 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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