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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 (NYSE: 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 (NYSE: ANH  )

Capstead Mortgage (NYSE: CMO  )

Redwood Trust (NYSE: 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!

Interested in another easy way to track Annaly? Add it to your watchlist.

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.


Read/Post Comments (1) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 29, 2011, at 11:24 AM, mikecart1 wrote:

    NLY is like taking candy from a baby. Instead of watching your money go no where in a 0.05% savings account, put it in NLY. The worst thing that can happen is that the dividend drops to under 10% and/or the stock drops to closer to $10/share. In that case, average down baby! By the time either happens, the rest of your portfolio will either be sky high, the economy will be cured, or the United States will cease to exist. In that case, NLY will be the least of your problems baby!

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Brian Pacampara
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I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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Related Tickers

9/17/2014 4:00 PM
NLY $11.40 Down -0.03 -0.26%
Annaly Capital Man… CAPS Rating: ****
ANH $5.05 Down -0.01 -0.20%
Anworth Mortgage A… CAPS Rating: ****
CMO $13.05 Down -0.02 -0.15%
Capstead Mortgage… CAPS Rating: ****
RWT $17.81 Down -0.37 -2.04%
Redwood Trust, Inc… CAPS Rating: *****

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