The problem with investing in penny stocks? These small-cap stocks are extremely risky and not a lot of people know how to properly find penny stocks to buy. The unpredictability of penny stocks can lure investors away. However, if you know which stocks to invest in you could see a high reward.
These equities trade quickly and movement can happen in a split second. Today, I will talk about 2 of the top penny stocks to watch right now: Fannie Mae and Freddie Mac.
Must Watch Penny Stocks: Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corp (FMCC)
The Federal National Mortgage Association (FNMA – FREE Report), commonly known as Fannie Mae, and The Federal Home Loan Mortgage Corp (FMCC – FREE Report), commonly known as Freddie Mac, are government-sponsored enterprises. They work alongside one another in order to make mortgages available to low-and moderate-income borrowers. In the secondary mortgage market, FNMA and FMCC backs or guarantees loans but does not provide them first hand.
Both FNMA stock and FMCC stock create liquidity by investing in the mortgage market in order to pool loans into mortgage-backed securities. Fannie Mae and Freddie Mac were taken over by the government in 2008 due to solvency issues.
These two were eventually bailed out by the U.S. government and delisted from the NYSE. Now both penny stocks trade OTC. In due time, FNMA and FMCC have managed to become the largest backer of 30-year fixed-rate mortgages. They are still playing a key role in dealing with homeownership.
Long-Term Government Plan
With a cash injection of $190 billion, both FNMA and FMCC are ready to pay back the government. President Trump is even talking about releasing FNMA and FMCC from government control, allowing them access into the public markets. However, releasing FNMA and FMCC will not be done overnight as U.S. treasury security, Steve Mnuchin, is looking for a long-term plan.
The long-term plan deems to be more effective as it provides government guarantees to the debt securities held by FNMA stock and FMCC stock. The mortgage bond tied to FNMA and FMCC could then be extremely profitable and decrease the cost of capital. A U.S. government guarantee could benefit a plethora of people tremendously. Investors should pay close attention if FNMA and FMCC are able to provide this.
Are FNMA stock and FMCC stock Penny Stocks To Buy In 2019?
Treasuries should be able to issue a proposed plan for the 2 companies at the end of July. Analysts are referring to Fannie Mae and Freddie Mac as “several positive events over the next six months.” After FNMA and FMCC repay the government, analysts suggest that FNMA will expect to raise $87 billion of new common stock shares.
FMCC will expect to raise $52 billion of new common stock shares. Together, Fannie Mae and Freddie Mac stock has surged 166% and 155% respectively due to the immense anticipation of the release of FNMA and FMCC from government control. It is extremely wise to pay attention to these 2 penny stocks.