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Top 10 'Buy'-Rated Stocks Under $5

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3. Chimera Investment (CIM - Get Report)

Company Profile: Chimera Investment is a specialty finance company that invests in residential mortgage-backed securities (RMBS), residential mortgage loans and other real estate-related securities. The stock has been an attractive pick for speculators thanks to an enormous 13% dividend yield.

Share Price: $4.17 (March 29)

Stock Performance This Year: 1%

Analyst Consensus: Chimera ranks third of this list with nine "buy" ratings from research firms, including Jefferies, Keefe Bruyette and Woods, and Cantor Fitzgerald. The other three analysts following the company have a "hold" rating on the stock. The average price target of $4.53 represents potential upside of only 8.6%, though.

Bullish Case: Bank of America/Merrill Lynch analyst Kenneth Bruce tempered his outlook on Chimera after the company lowered its first-quarter dividend payment by 3 cents. Still, Bruce maintains a "buy" rating and $4.25 price target on the stock, noting Chimera's relatively high returns on invested capital.

"Despite a modestly lower dividend of 56 cents annually, we believe CIM shares should continue to benefit from robust demand for yield in equity markets, given an implied 13% to14% dividend yield from the current share price," Bruce wrote in the March 22 research report.

TheStreet Ratings doesn't have a rating on Chimera Investment.

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C $51.65 0.25%
CIM $3.14 0.16%
DRYS $0.75 -1.70%
GST $2.65 1.10%
S $4.73 -0.21%


DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

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