I've gotten a number of questions regarding places to put money. Stocks are beaten down, so are bond yields. What's an investor looking to put money to work for 2-3 years to do?
1. Calpine (CPN)
- This utility trades at a HUGE discount to its enterprise value, likely due to investors attempting to front run expected liquidations by CPNs HUGE hedge fund/ private equity holders.
2. Shaw Group (SGR)
- This Jim Cramer favorite has a great backlog (a few BILLION), yet trades near its cash holdings of a bit above ONE billion. This stock, likely beaten down due to its major hedge fund holders, has a diversified group of businesses and will be a TOP rebound candidate once markets turn.
3. Agency Capital Corp. (AGNC)
- This American Capital Strategies (ACAS) affiliate invests in Freddie, Fannie and Ginnee Mae paper which, due to recent government guarantees, should trade like treasuries. Dislocations in the market, however, have created shocking opportunities to invest in guaranteed securities, which AGNC does on a leveraged basis. Huge >20%+ yield.
4. Mosaic (MOS)
- This ag favorite is trading at the same price it was in early 2007 when sales AND prices were lower. At this price, growth expectations make this stock hard to pass.
If you're in it for the long run, it's going to be hard to bet against these plays.
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Regarding AGNC, why would one want to pay an 8% premium to book (using a share price of 19.31) to buy agency paper that one could buy for themselves? Do they have a particularly well known proclivity for picking agency paper issues? Or is it for the cheap leverage?
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