As all three major U.S. indices were trading up on Tuesday, I wanted to examine three REITs that are performing much better then Annaly Capital Management (NLY) in terms of Return on Equity (ROE), Return on Assets (ROA), and Profit Margin. Do I think NLY is a bad investment? No. However, I think there are at least three, if not more, REITs that have demonstrated better returns in these particular areas.
An Overview of Annaly Capital Management
Annaly Capital Management - Shares of NLY were trading at $17.05/share at the close of Monday's trading session, making the stock attractive at these levels. Currently trading in a 52-week range of $14.05/share (52 week low) and $18.45/share (52 week high), NLY yields 13.0% ($2.20) and was recently reiterated as a BUY by TheStreet.com, who noted both revenue growth and profit margins as positive catalysts moving forward. When it comes to NLY, the yield isn't the only attractive quality I like. There are a few ancillary variables that potential investors should consider. First, NLY has demonstrated a 3.79% Return on Equity (ROE) over the last year, and a 0.50% Return on Assets (ROA) over the last year, both of which are positive, but not as positive as the company's industry counterparts. Second, the company has demonstrated a profit margin of 63.40%, which ranks 4th out of the four REITs in this screen. Potential investors certainly have a good opportunity at the current share price of $17.05/share, but if the stock drops another 5%-10%, I'd see a much better buying opportunity.
The 3 Alternative REITs I Like At Current Levels
Newcastle Investment Corp. (NCT) - Shares of NCT were trading at $7.24/share at the close of Monday's trading session, making the stock very attractive at these levels. Currently trading in a 52-week range of $3.56/share (52 week low) and $7.31/share (52 week high), NCT yields 11.2% ($2.20) and was recently initiated by Credit Suisse with an Outperform rating. When it comes to NCT, the yield isn't the only enticing variable. There are several ancillary variables that potential investors should consider. First, NCT has demonstrated a 111.53% Return on Equity (ROE), and a 5.77% Return on Assets (ROA) over the last year, both of which are very positive catalysts. Second, the company has demonstrated a profit margin of 125.13%, which ranks 1st out of the four REITs in this screen. Potential investors certainly have a good opportunity at the current share price of $7.24/share, but I would consider a much larger position if the stock drops another 7%-15%.
Chimera Investment Corp. (CIM) - Shares of CIM were trading at $2.33/share at the close of Monday's trading session, making the stock very attractive at these levels. Currently trading in a 52-week range of $2.27/share (52 week low) and $3.37/share (52 week high), CIM yields 15.3% ($0.36) and even though it was recently downgraded by Barclay's, that shouldn't be enough to deter potential investors. When it comes to CIM, the yield isn't the only variable I consider. There are a few secondary variables that potential investors should consider. First, CIM has demonstrated a 17.75% Return on Equity (ROE), and a 6.55% Return on Assets (ROA) over the last year, both of which are very positive catalysts. Second, the company has demonstrated a profit margin of 90.42%, which ranks 2nd out of the four REITs in this screen. Potential investors certainly have a good opportunity at the current share price of $2.33/share, but I would consider a much larger position if the stock drops another 5%-12%.
Crexus Investment Corp. (CXS) - Shares of CXS were trading at $10.28/share at the close of Monday's trading session, making the stock attractive at these levels. Currently trading in a 52-week range of $8.03/share (52 week low) and $11.50/share (52 week high), CXS yields 10.6% ($0.36) and is distributing a $0.27/share dividend on July 26th. When it comes to CXS, its not only the yield that strikes me as attractive. There are several other variables that potential investors should consider. First, CXS has demonstrated a 13.24% Return on Equity (ROE), and a 10.55% Return on Assets (ROA) over the last year, both of which are very positive catalysts. Second, the company has demonstrated a profit margin of 87.45%, which ranks 3rd out of the four REITs in this screen. Potential investors certainly have a good opportunity at the current share price of $10.28/share, but I would consider a much larger position if the stock drops another 5%-12%.
