Annaly Mortgage recalibrates to re-ignite profits

A mortgage lender stock? In this market?

Yes, if you can tolerate high risk, and Annaly Capital Management, Inc. (NYSE: NLY) is the company to consider.
Analysts believe Annaly Mortgage has taken the steps needed to position itself in the challenging and risky residential mortgage-backed securities market, with most analysts expecting earnings growth to accelerate in 2008. The Reuters FY 2007/FY 2008 EPS consensus estimates for NLY are $1.27 to $1.96

That's not to say that mortgage sector conditions will improve universally, but the point here is that NLY is in a decent position well before attitudes toward the industry are likely to change. In that sense, NLY is a 'get ahead of the pack' play, but it's only for high-risk investors.

For the most part, Annaly has realigned its portfolio to remove credit risk and has a business model that concentrates on managing interest rate and prepayment risk.

The First Call mean rating for NLY is: Buy [12 firms]. Mean 2008 target: $18.90 [high: $20, low: $18].

Stock Analysis: Annaly Mortgage is a high-risk investment not suitable for low-risk or moderate-risk investors. Sell/Stop Loss if you to purchase shares in this company: $9.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.