For Immediate Release
Chicago, IL - February 09, 2016 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks and ETFs recently featured in the blog include Sotherly Hotels Inc. ( SOHO ), New Residential Investment Corp. ( NRZ ), Hatteras Financial Corp ( HTS ), Preferred Apartment Communities, Inc. ( APTS ) and New Senior Investment Group Inc. ( SNR ).
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Here are highlights from Monday's Analyst Blog:
High-Yield REIT Picks on Mixed Jobs Data
Unemployment hit an eight-year low in the latest jobs report. But this piece of data failed to lift sentiment as the number of jobs added came in well below estimates. Consumer, tech stocks and other growth-oriented stocks suffered losses because of concerns about economic growth.
Given the lack of clarity in job numbers, it is nearly certain that the Fed will put off raising rates in March. Real estate investment trusts (REITs) are likely to prosper in such an environment and it would be a good idea to pick high yield choices from this investment class.
Data Provides Mixed Signals
This was the first time that unemployment declined below the 5% mark in eight years. The jobless rate slipped marginally from the level of 5% recorded in December to 4.9% for January. However, at 151,000, job additions came in well below the consensus estimate of 195,000.
In contrast, average hourly earnings moved up 0.5% from December to $25.39. The metric also recorded a year-over-year increase of 2.5%. This is marginally lower than the highest level experienced since the recession ended, which was recorded in December.
President Obama hailed the numbers, emphasizing the record low unemployment rate and 71 consecutive months of job additions in the private sector. He also highlighted the fact that wage growth was finally kicking in.
Rate Hike Unlikely
The report indicates that the labor market is in better health but also points out areas which may still be a cause of concern. In his reaction to the report, President Obama admitted that the country was still coping with the after effects of the recession. At 62.7%, the labor force participation rate is still something to worry about. It simply indicates that many people are not actively seeking jobs.
Other economic indicators also remain a matter of concern. The ISM Manufacturing Index has remained flat while the services gauge has declined in January. Factory orders have declined more than expected.
At the same time, it is unlikely that the Fed will keep rates where they are through 2016. However, a hike in March now seems unlikely. Barclays economists reduced their forecast of the number of rate hikes likely this year from three to two after the jobs report was released.
The nature of economic data means that we may experience a low interest rate regime for most of the year. This is an environment where REITs thrive, making them a good investment option at this point.
Those REITs which have strong dividend yields are an even more attractive choice. It is also better to pick value oriented stocks given the current market environment. Adding such stocks to your portfolio at this time would make for a prudent choice. Our selection is also backed by a good Zacks Value Score and Zacks Rank.
We narrowed down our choices with the help of our new style score system .
Our research shows that stocks with a Value Style Score of 'A' or 'B' when combined with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the value investing space.
Sotherly Hotels Inc. ( SOHO ) is a REIT focused on the acquisition, renovation and repositioning of upscale to upper upscale full-service hotels.
Sotherly Hotels holds a Zacks Rank #2 (Buy) and has a Value Style Score of 'A.' The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 4.23, lower than the industry average of 11.88. The stock has a dividend yield of nearly 6.1%.
New Residential Investment Corp. ( NRZ ) is a REIT which concentrates on investing in and actively managing, assets related to residential mortgages.
New Residential Investment has a Zacks Rank #2 and has a Value Style Score of 'A.' It has a P/E (F1) of 5.30, lower than the industry average of 7.52. The company has a dividend yield of 17.4%.
Hatteras Financial Corp ( HTS ) is an externally managed mortgage REIT. It invests in residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or U.S. Government-sponsored entities.
Hatteras Financial holds a Zacks Rank #2 and has a Value Style Score of 'B.' It has a P/E (F1) of 7.44, lower than the industry average of 7.52. The company has a dividend yield of nearly 14.3%.
Preferred Apartment Communities, Inc. ( APTS ) is a REIT which focuses on investing in, and actively managing multifamily properties.
Preferred Apartment Communities holds a Zacks Rank #2 and has a Value Style Score of 'B.' The stock has a P/E (F1) of 8.80x, lower than the industry average of 16.30. The stock has a dividend yield of 6.7%.
New Senior Investment Group Inc. ( SNR ) is a REIT focused on investing in senior housing properties located in the US.
New Senior Investment Group holds a Zacks Rank #2 and has a Value Style Score of 'B.' The stock has a P/E (F1) of 6.58x, lower than the industry average of 16.30. The stock has a dividend yield of 10.8%.
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