2. Annaly Capital Management ( NLY) invests in mortgage-backed securities.
The numbers: Annaly swung to a fourth-quarter profit of $729 million, or $1.30 a share, from a loss of $507 million, or 95 cents, a year earlier. Revenue rose 16% to $865 million. The operating margin remained steady at 96%. Annaly holds $2.3 billion of cash and $55 billion of debt. The stock: Annaly has gained 36% in the past year. It sells for a price-to-projected-earnings ratio of 6.5, an 89% discount to the industry average. The shares are also cheap when comparing trailing earnings, book value and sales. The REIT yields 16.6%.