This stock is a ‘Strong Buy’ at today’s valuation level. The dividend is covered by NII, making another dividend cut in the foreseeable future unlikely. It is oversold and sells for an exaggerated discount to NAV. I think the reward-to-risk ratio is very attractive in the high $5s or very low $6s.
Prospect Capital Corporation (PSEC) makes a compelling value proposition after the latest drop. The BDC recently slashed its dividend which triggered a major sell-off in the stock. Today’s large Net Asset Value discount provides income investors with a wide margin of safety that points to attractive total returns. Prospect Capital’s dividend should be sustainable at its current level, and I think the stock has an attractive reward-to-risk combination. An investment in Prospect Capital yields 11.9 percent.
Source: Seeking Alpha
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