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Annaly Capital Management (NLY) Highlighted As Storm The Castle Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Annaly Capital Management ( NLY) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Annaly Capital Management as such a stock due to the following factors:

  • NLY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $121.5 million.
  • NLY has traded 5.2 million shares today.
  • NLY is trading at 1.86 times the normal volume for the stock at this time of day.
  • NLY crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in NLY with the Ticky from Trade-Ideas. See the FREE profile for NLY NOW at Trade-Ideas

More details on NLY:

Annaly Capital Management, Inc. owns, manages, and finances a portfolio of real estate related investments in United States. The stock currently has a dividend yield of 10.5%. NLY has a PE ratio of 3.0. Currently there is 1 analyst that rates Annaly Capital Management a buy, 2 analysts rate it a sell, and 11 rate it a hold.

The average volume for Annaly Capital Management has been 11.3 million shares per day over the past 30 days. Annaly Capital Management has a market cap of $10.6 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.06 and a short float of 2.3% with 2.05 days to cover. Shares are up 12% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Annaly Capital Management as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 46.9% when compared to the same quarter one year prior, rising from $700.50 million to $1,028.75 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, ANNALY CAPITAL MANAGEMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ANNALY CAPITAL MANAGEMENT is currently very high, coming in at 93.44%. Regardless of NLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NLY's net profit margin of 119.86% significantly outperformed against the industry.
  • NLY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.32%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has significantly decreased to -$6,000.48 million or 1800.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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