There are some valid reasons for ARMOUR Residential REIT, Inc. (NYSE:ARR) being one of the few REITs trading lower over the past year. Since moving to a monthly dividend of $0.12 a share two years ago, it has come through with five rate decreases. Investors are now receiving $0.07 a share every month.
ARMOUR is also expected to post lower earnings this year, possibly pressuring the REIT into another dividend cut. Oh, and it has also missed Wall Street profit targets in each of the past three quarters, so analysts have actually proven to be too optimistic in assessing ARMOUR’s financial performance.
However, worrywarts bracing for another payout cut have bid the stock below book value. It’s not that bad here. Despite the first quarter’s lower-than-expected results, ARMOUR is still generating annualized ROE of 13.8% from taxable REIT income. With analysts seeing the earnings deterioration stabilize next year, we could be nearing the end of the distribution cuts.
NovaGold Resources Inc. (USA) (NYSEMKT:NG) — $2.13
Shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) tumbled 15% last week, but there wasn’t any company-specific news behind the slide. Many of the precious metals companies suffered double-digit percentage hits as gold, silver, and copper prices continue to head lower.
If Millennial Media is unloved despite being in the right place at the right time, NovaGold is out of favor because it’s in the wrong place at the wrong time.
NovaGold Resources Inc. (USA) (NYSEMKT:NG) didn’t help its case last month when it posted a larger quarterly deficit than Wall Street was expecting, and that’s the third period in a row that the gold miner has come up short on the bottom line.
I have never fancied myself a gold bug, and I can name several fellow Fools who know the industry far better than I ever will. However, I do know that the smart move was to bail several months ago when everyone was talking up commodities and every other ad seemed to be for a service buying back gold. Now that speculators have turned away from precious metals, wouldn’t that make this a good time for contrarians to buy back in?
Five for the road
These five stocks aren’t trading in the single digits by accident. If I’m right about the catalysts, though, they may not be trading in the single digits for too much longer.
Finding promising stocks while they’re still cutting their baby teeth is at the heart of the Rule Breakers newsletter that I write for. You can check it out for free this month with a 30-day trial subscription. There are roughly a half dozen active stock recommendations in the growth stock research service trading for less than $10 at the moment. Check those out, and I’ll be back with more on the third Monday of next month.
The article 5 Stocks Under $10 Worth Buying originally appeared on Fool.com and is written by Rick Munarriz.
Longtime Fool contributor Rick Munarriz owns shares of Ford and Millennial Media. The Motley Fool recommends and owns shares of Ford.
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