These stocks have been hammered this year as yield spreads shifted and earnings and book values fell substantially. Naturally this activity was picked up by Portfolio Grader, and most of these REITs are now graded a “D” or “F.” However, Wall Street has a tendency to throw the baby out with the bathwater, and that appears to the case with some of the mortgage REITs right now.
Pervasive selling has given nearly all of these stocks a quantitative grade of “D” or “F.” Most of the group also has very poor fundamental grades, and should be avoided. However, three stocks stand out with solid fundamental scores and could be positioned to rebound ahead of the sector. Don’t take any action until selling abides and quantitative grades improve, but these high yielders should be on your radar screen.