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How Investors Could Profit in the Current Housing Market, According to Financial Site PennyStockDetectives.Com(April 10, 2012)
New York, NY (PRWEB) April 10, 2012
Sasha Cekerevac, co-editor for Penny Stock Detectives, believes that, although prices for real estate are still quite low nationwide, the astute investor with a long time horizon will find some very interesting opportunities in the current housing market. In a recent Penny Stock Detectives article, Cekerevac says that, while some do-it-yourself investors might want to go into the home foreclosure market themselves, he prefers a more diversified approach by investing in a real estate investment trust (REIT).
I would say that almost anything could be seen as a good investment; it just depends on what the price is, said Cekerevac. Just like you might not think the housing market made much sense in the boom period; at current levels with prices off 40% in some markets, for investors who are patient, this could be a very profitable investment over the next decade.
Of the several interesting players in the mortgage-backed securities sector that should benefit from a rebound in the housing market, Two Harbors Investment could be worth a look, in Cekerevacs opinion. The firm invests in mortgage-backed securities, real properties, and mortgage loans. Many of the assets are backed by Fannie Mae and Freddie Mac. As outlined in Cekerevacs article, Two Harbors also has a mandate to distribute 90% of net income to shareholders, which will amount to a dividend yield of 15.9% in 2012, and it currently has $1.62 billion in cash on hand. The editor believes that the biggest problem with this mortgage-backed securities REIT is that other investors have recognized the value in this stock and it is trading at a slight premium to its book value at 1.12 times. Cekerevac says he would certainly look for disruptions in the market in which this equity is sold off to possibly acquire some of this stock.
When it comes to mortgage-backed securities investments, there are several things to be careful of, notes Cekerevac. The housing market needs to continue to improve and firms need to generate enough cash to distribute to investors; otherwise, there is always the danger that the dividend could be cut. However, the recent trend in mortgage-backed securities is that prices have moved substantially off the bottom, says the editor. From the lows near $0.30 on the dollar, many mortgage-backed securities are trading at approximately $0.50 on the dollar. For the long-term investor, says Cekerevac, mortgage-backed securities investments in the housing market sector might make a nice addition to an overall portfolio.
Published every business day, Penny Stock Detectives researches and analyzes low-priced opportunities in the stock market and individual stock market sectors. Penny Stock Detectives reports on penny stocks, small-cap stocks, micro-cap stocks, high-profit potential plays mostly under $10, and the stock market in general.
To see the full article and to learn more about Penny Stock Detectives, visit http://www.pennystockdetectives.com.
The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at http://www.pennystockdetectives.com.
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