Newcastle Investment Corp. ($NCT) Spikes 15% on Quarterly Results

Shares of Newcastle Investment Corp. (NYSE: NCT) surged more than 15% in today’s trading. New York City-based Newcastle Investment Corp. is a real estate related investment and finance company. The small-cap stock reached a high of $3.74 in today’s trading.

Newcastle today announced its first-quarter results, posting net income attributable to common shareholders at $180.2 million, or $3.36 per diluted share. In the same period last year, the company reported a loss of $242.2 million. In the first quarter, the company settled an offer to exchange its common stock and cash for a total of 1,152,679 of its Series B Preferred Stock, 1,104,000 shares of its Series C Preferred Stock and 1,380,000 shares of its Series D Preferred Stock. On settlement of the “Exchange Offer,” the company issued 9,091,698 of its common stock and also paid $16 million in cash.

In its latest 10K, the company mentions that it employs leverage as a part of its investment strategy. This makes its business model very risky. The company also mentions that it is uncertain about the impact; the U.S. government’s programs to stabilize the economy and regulate financial markets will have on its business. It also says that the government’s efforts to modify terms of outstanding loans would negatively affect its business and financial condition. Also, declining real estate values, if prolonged, would negatively impact the company’s business. The company’s liquidity position is also not very healthy.

All these makes the company’s stock very risky and subject to volatility. And it has been volatile in the past year. The small-cap stock has a 52-week range of $0.49-$4.18. The stock also has a very high beta of 3.74, which again indicates high volatility. Currently, the small-cap stock is trading above its 50-day and 200-day moving averages. Although today’s announcement is a positive, Newcastle’s business model and the uncertainty in the real estate market makes the small-cap stock very risky.

About MicroStockProfit.com

MicroStockProfit.com is committed to producing the highest-quality insight and analysis of small cap stocks, emerging technology stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or “penny stock” market, which has traditionally been shunned by Wall Street. We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.