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Annaly Capital Management
Annaly Capital Management
Get Quote: NLY
Price on 12/17/08: $16
Total return: 4%

Annaly is the only 2008 pick that made our 2009 list as well, so obviously we're still fans.

Annaly is a mortgage hedge fund disguised as a REIT, but that's much less scary than it sounds. The company only invests in government-guaranteed mortgages, not the exotic stuff now burning holes in bank balance sheets. Best of all, the dividend yield is now 12% versus 5% when we recommended it last year.

Back then we wrote that "there's probably no company better positioned to profit from the ongoing mortgage crisis than this one." Annaly's bottom line bore this out - earnings rose 84% through the first three quarters of 2008 - but the market hasn't been terribly appreciative. Annaly is currently trading at a mere 7 times projected 2009 earnings.

Our advice: BUY

NEXT: Berkshire Hathaway

Last updated December 22 2008: 10:11 AM ET
Note: Starting date for all total return data is 12/3/07, except Genentech, which is 12/5/07.
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