Chicago, IL – January 9, 2025 – Zacks Equity Research shares Marvell Technology MRVL, as the Bull of the Day and Hooker Furniture HOFT, as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NexPoint Real Estate Finance NREF, Two Harbors Investment Corp TWO and MFA Mortgage Investments, Inc. MFA.
As the AI boom continues to gain momentum, new companies are carving out niches in this rapidly growing industry. Marvell Technology, a leading US semiconductor developer, has positioned itself as a key player in the movement by designing custom silicon solutions for AI hyperscalers.
Marvell has recently seen significant upward revisions to its sales and earnings forecasts, driven by a strong quarterly earnings report last month and giving it a Zacks Rank #1 (Strong Buy) rating. The company has also identified an excellent vertical within the industry, offering a complementary product rather than competing directly with AI giant Nvidia. This strategic approach sets Marvell apart as a critical contributor to the expanding AI ecosystem.
Not only does Marvell have strong growth trends and sit within one of the most exciting developments in the market today, but it also boasts a compelling technical chart pattern and strong price momentum. Over the last year, MRVL stock has massively outperformed the broad market and more recently pulled ahead of the semiconductor sector.
In its most recent quarterly earnings report, Marvell Technology announced impressive growth, with revenues up 19% quarter-over-quarter and AI-related sales soaring 98% year-over-year. Looking ahead, the company expects another 19% sequential increase in sales next quarter. Additionally, Marvell secured a five-year deal with Amazon to design custom AI chips for the next generation of its cloud systems, further solidifying its position in the AI and cloud computing markets.
Not surprisingly, analysts have begun to raise their earnings forecasts for MRVL. Next quarter earnings estimates have jumped by nearly 16% and analysts have unanimously raised projections across all future timeframes. Annual sales are expected to climb 40% next year, while earnings per share are forecast to grow 33.74% annually over the next three to five years.
The scale of the infrastructure buildout currently underway in the AI space is almost unimaginable. Mega-cap technology giants like Amazon, Meta Platforms, and others are racing to construct massive data centers, with some costing over $20 billion each. Marvell’s chips are set to play a crucial role in powering many of these cutting-edge facilities, positioning it extremely well in the coming months.
Following the earnings report I noted, MRVL stock gapped significantly higher and has been consolidating in a broad range since then. This is a standard continuation setup, as buyers accumulate shares and the stock primes for another rally. If the stock price can break out above the $125 level, it would signal a technical breakout.
Alternatively, investors don’t need to wait for the stock to breakout and can consider buying the shares within the range with an eye on the lower level of support around $105.
Marvell Technology’s position in the AI revolution, paired with its impressive financial growth and strategic partnerships, makes it a standout opportunity in the semiconductor space. The company’s focus on custom silicon for AI hyperscalers positions it at the heart of one of the most transformative trends in tech.
Hooker Furniture has long been known as a manufacturer of high-quality home furnishings, specializing in stylish and durable designs. However, despite its reputation, the company has faced significant challenges in recent years. Annual sales have steadily declined over the past five years, reflecting struggles to maintain growth in an increasingly competitive market.
Adding to its woes, Hooker Furniture currently holds a Zacks Rank #5 (Strong Sell), signaling persistent weakness in earnings trends and analyst sentiment. The stock’s performance has mirrored these struggles, with shares underperforming the broader market and industry peers.
In today’s analysis, we’ll explore the factors behind Hooker Furniture’s struggles and why investors may want to steer clear of this stock for now.
The past few years have been challenging for Hooker Furniture, with annual sales nearly halving during that time. Analysts remain pessimistic about the company’s near-term prospects, with next quarter’s earnings estimates down 5% and next year’s earnings estimates slashed by 14%.
Hooker Furniture has also had a very poor record of missing earnings estimates over the last year. The last four earnings results have missed by -1,100%, -46.15%, -1,200% and -40%.
There may be a light at the end of the tunnel though, as next year’s sales are projected for 13% growth. However, this is not yet enough of a bullish development to consider owning the stock.
The technical picture for Hooker Furniture stock is not encouraging either. HOFT stock has been trending lower for the last six years and is approaching a level of support that has held for the last four years. If the stock breaks meaningfully below where it is currently trading, it could signal even further uncertainty.
The only positive I can see from this setup is that maybe a flush below here would be the final capitulation before the company can finally recover, but that is certainly not a reason to own the stock.
Given the ongoing challenges Hooker Furniture faces, including declining sales, repeated earnings misses, and a bleak technical outlook, it’s difficult to make a bullish case for the stock at this time. While there’s a glimmer of hope with next year’s projected sales growth of 13%, the broader picture remains negative, and this improvement alone is unlikely to reverse the stock’s long-term downtrend.
With HOFT holding a Zacks Rank #5 (Strong Sell), continued weak performance, and the risk of a technical breakdown looming, investors may be better off avoiding Hooker Furniture shares for now. Instead, it might be wise to look for opportunities in companies with stronger fundamentals and more positive earnings and price momentum.
Mortgage rates moved up last week and reached the highest point since July 2024. Per the Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.91% as of Jan. 2, 2025, up from 6.85% a week earlier.
The latest spike in mortgage rates follows the Federal Reserve’s slower rate-cutting timeline. The Fed has indicated cutting benchmark interest rates just twice in 2025 to fight inflation, whereas four reductions were expected earlier for 2025.
Despite rising mortgage rates, investors can consider buying mREIT stocks like NexPoint Real Estate Finance, Two Harbors Investment Corp and MFA Mortgage Investments, Inc. for generating solid returns in 2025.
In recent weeks, with a rise in mortgage rates, purchase applications and refinancing activities declined. Per a Mortgage Bankers Association report, the refinance share of mortgage activity decreased to 39.4% of total applications as of Jan. 2, 2025 from 44.3% in the week earlier.
Nonetheless, the U.S. economy is expected to continue its growth in 2025, although at a slightly slower pace than in 2024. This, along with interest rate cuts, will gradually lower mortgage rates. Given the increasing supply and relatively high mortgage rates, house price appreciation may remain moderate.
This, along with increased home sales, should strengthen purchase originations by 2025. Refinance volumes are also likely to rise due to falling mortgage rates.
With a gradual decrease in mortgage rates, improving purchase originations and refinancing activities, mREIT companies will likely witness book value improvement in 2025 as spreads in the Agency market tighten, driving asset prices. Also, with lower Fed rates, earnings pressure for highly leveraged mREITs will ease to some extent as funding costs stabilize.
Further, mREITs primarily focus on leveraged investments in Agency residential mortgage-backed securities (RMBS), including residential mortgage pass-through securities and collateralized mortgage obligations. The long-term outlook for Agency MBS is favorable. Agency MBS spreads have remained in a range that supports positive long-term risk-adjusted returns for leveraged mREIT companies.
Investors can consider the following mREIT stocks with lucrative dividend yields and strong growth projections to generate healthy returns in 2025. In the past year, these three stocks have outperformed the industry.
NexPoint: The company based in Dallas, TX, originates, structures and invests in first mortgage loans, mezzanine loans, preferred equity and alternative structured financings in commercial real estate properties, as well as multi-family commercial mortgage-backed securities.
NREF continues to identify and attract investment opportunities across its target markets and asset classes with a commitment to thorough evaluation aimed at enhancing shareholder value. The company remains optimistic about the resilience of the residential sector, especially in the current interest rate environment.
Its investments in the multi-family and single-family segments are well-positioned, supported by historical performance and a favorable rent versus own dynamic that provides long-term momentum for the sector. NexPoint closed on a highly accretive SASB financing in early October that recapitalized all of its outstanding debt stack with a fixed rate execution and strong interest from the market at tighter pricing than anticipated. NREF management expects to monetize them in 2025.
The company’s net interest income (NII) declined in the first nine months of 2024, as NII plunged 50.3% to $6.4 million from the prior-year period. As of Sept. 30, 2024, NexPoint’s book value per share decreased to $16.90 from $17.84 as of Sept. 30, 2023. Nonetheless, with the Fed rate cuts, the company’s NII is expected to improve.
NREF has a current dividend yield is 12.96%. It has increased its dividend four times in the last five years and has a payout ratio of 161%.
NexPoint Real Estate Finance, Inc. dividend-yield-ttm | NexPoint Real Estate Finance, Inc. Quote
The Zacks Consensus Estimate for 2025 earnings is pegged at $2.44 per share, indicating a year-over-year increase of 41.6%.
NexPoint currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TWO Harbors: The company has established an investment portfolio primarily composed of RMBS with mortgage servicing rights (MSR) at its core. This portfolio has less exposure to changes in mortgage spreads than portfolios without MSR while maintaining the benefits of spread tightening and declining volatility. As of Sept. 30, 2024, the company’s total portfolio had 74.7% exposure to Agency RMBS.
High-quality investment returns are Two Harbors' primary emphasis, and its combined approach aims to maximize value extraction from MSR assets for the benefit of shareholders. The company is also enhancing its investment portfolio with more revenue and hedging options.
TWO’s financials have been adversely impacted by high interest rates. Higher rates led to a surge in the company’s borrowing costs, which resulted in a net interest loss in the nine months ended Sept. 30, 2024. With the falling interest rate, Two Harbors’ earnings pressure should be alleviated as funding costs come down, allowing the company to increase its dividend payout.
TWO’s current dividend yield is 15.73%. It increased its dividend four times in the last five years. Two Harbors has a payout ratio of 161%.
Two Harbors Investments Corp dividend-yield-ttm | Two Harbors Investments Corp Quote
The Zacks Consensus Estimate for the company’s 2025 earnings is pegged at 85 cents per share, indicating a year-over-year increase of 81.9%. It currently flaunts a Zacks Rank of 1.
MFA Mortgage Investment: This leading specialty finance company invests in residential mortgage loans, residential MBS and other real estate assets. Through Lima One Capital, its wholly-owned subsidiary, MFA also originates and services business purpose loans for real estate investors.
The company is making significant progress in its MB portfolio and loan originations, boosting its financial performance. MFA added $293.9 million of Agency MBS in the third quarter of 2024, bringing its Agency MBS portfolio to $993.5 million. MFA Mortgage also acquired or originated $565 million of high-yielding residential mortgage loans in the third quarter of 2024.
In the first nine months of 2024, MFA’s NII increased year over year. With future rate cuts, its NII is expected to improve further.
MFA Mortgage’s current dividend yield is 13.93%. It increased its dividend four times in the last five years. The company has a payout ratio of 94%.
MFA Financial, Inc. dividend-yield-ttm | MFA Financial, Inc. Quote
The Zacks Consensus Estimate for 2025 earnings is pegged at $1.62 per share, indicating a year-over-year increase of 3.6%. MFA Mortgage currently carries a Zacks Rank of 2 (Buy).
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Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report
Two Harbors Investments Corp (TWO) : Free Stock Analysis Report
MFA Financial, Inc. (MFA) : Free Stock Analysis Report
Hooker Furnishings Corp. (HOFT) : Free Stock Analysis Report
NexPoint Real Estate Finance, Inc. (NREF) : Free Stock Analysis Report
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