American Capital AGNC- A Nice Analysis

American Capital AGNC A Strong Stock to Watch

Companies to Watch

American Capital Agency Corp (AGNC)

American Capital Agency Corp. (AGNC) operates as a real estate investment trust (REIT). It invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government sponsored entities. The company funds its investments primarily through short-term borrowings structured as repurchase agreements. It has elected to be taxed as a REIT under the Internal Revenue Code of 1986. As a REIT, the company would not be subject to U.S. federal or state corporate taxes on its taxable net income to the extent that the company distributes its annual taxable net income to its stockholders.

 

Earnings Estimates are up 55.84% from a year ago at this time. Last year they were at $.77 and this year they are at $1.20. This is much higher than analyst’s forecasts. Because of this they have increased the quarterly earnings for (AGNC).

 

AGNC also has good value for a company of its size. With a P/E Ratio of 4.1 while the industry as a whole is 40.3 and with a Price/Book Value of half the industry (1.23 to 2.45) it is a good buy. With all the money that people invested in this Industry that (AGNC) is a part of, it lost money, losing an embarrassing (-.70%) on its’ investments. On the other
hand, (AGNC) generated a very healthy 29.5% return on the money that share holders invested in the company. This may be one of the reasons that the dividend returns on this company are a hot air balloon shattering 20.22% right now.

 

On a weekly chart we can see how this company has been moving sideways for quite awhile. An ascending triangle gives us long term signals that this company may be in the midst of a possible upswing in the coming future.

 

The ascending triangle is a bullish formation that usually forms during an uptrend as a

continuation pattern. Since late August of 2009 was the end of an upward pattern, it appears that our stock has been moving sideways since that time in a resting or consolidating pattern and may be ready to move up soon.

If we buy this stock now, what can we expect?

On a daily chart we have seen this stock moving sideways for quite awhile now. Presently, it appears to be testing the lasting high as well as possibly building a support area for a move up. This is going to be a very important point for the stock.

If it breaks out, we have a move to 31.50 ahead of us. If it does not break out here, and one wishes to buy the stock out right, there are a couple plays that look good. Buying the stock, one may hold it and at the right time sell Call Options. If it breaks out, look at a Bear Call Option play as well as owning the stock.