Capstead Mortgage Corp (CMO)

TMFOtter (99.79) Submitted: 10/24/06 9:54 PM : Start Price: $7.19 CMO Score: 67.95

Unbelievably risky stock working at 28:1 leverage. Capstead has a preferred class that has been savagely dilutive over the last few years, but should turn accretive by next year.

This stock will get killed if the Fed keeps raising rates. If they don't, their cost of funds will continue to outstrip their cost of capital. It's a story of the downside of leverage.

But when things go right, Capstead should produce rivers of cash. Then come the dividends, then come the yield pigs.

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