AGNC Investment (AGNC)'s Outlook for Agency MBS Remains Favorable

AGNC Investment Corp. (NASDAQ:AGNC) is one of the Most Undervalued Stocks Under $10 to Buy Now. In Q1 2025, the prospects of potential governmental policy actions impacting economic growth and accelerating inflationary pressures weighed on investor sentiments. Resultantly, there was a flight to high-quality assets, including US Treasuries, Agency MBS, and cash, from higher-risk assets like equities and corporate debt. Amidst these conditions, the company generated a favorable economic return of 2.4% in Q1 2025. Despite the decline in broader equity markets, AGNC Investment Corp. (NASDAQ:AGNC)’s total stock return with dividends reinvested for the quarter came in at 7.8%.

After the April tariff announcement, there was a substantial increase in financial market volatility. With AGNC Investment Corp. (NASDAQ:AGNC)’s conservative leverage profile and sufficient liquidity at quarter end, the company was well-placed for this instability. While the company’s NAV was negatively impacted due to the mortgage spread widening, the expected return on its portfolio was higher, reflecting these wider spread levels. Agency MBS provides investors an attractive fixed income alternative to corporate debt and other credit-sensitive instruments, mainly during a deteriorating economic outlook. Therefore, AGNC Investment Corp. (NASDAQ:AGNC)’s outlook for agency MBS remains favorable.

AGNC Investment Corp. (NASDAQ:AGNC) offers private capital to the housing market.

While we acknowledge the potential of AGNC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.