When is a the best time to buy Ctigroup stock shares. Is citigroup stock a good buy to invest in now in 2012? Is Citi (C) a good stock to buy? Should I buy Citigroup stock at this time as a good investment or sell? Let’s take a look at some of the more recent developments like earnmings and the stress test that have surrounded Citigroup in order to answer these questions!!
First we have to look at the stress test and see how will the stress test affect citigroup stock going forward. Citi did not pass the Fed stress test. This means that Citigroup will need to raise more capital in order to pass the next stress test and be able to buy back more of its stock from shareholders or raise its dividend. But let us not forget that Citi is still a dividend paying bank stock, it just cannot increase its dividend at this time. Citi also reported earnings that were slightly dissapointing as per the Street’s estimates so the company still has not gotten its earnings machine back on track.
Citigroup’s stock price has climbed despite the stress tests and its earnings report. It closed in March of 2012 at over $38 a share and sits at over$33 per share. Why is that??Partly this is due to the rise in the stock market but also to the beta that investors sought. The beta of Citi group has been sitting around 2.5 and 3 which means that the stock moves in the same direction of the overall market but it does so at an amplified level. Some investors have said that any investment in Citigroup is a beta play. They buy Citi stock shares on the expectation that the stock market will rise and that they will be able to purchase more shares in Citigroup. They sell Citi on nervousness and weakness in the QQQ or Dow Jones Averages. They also buy or sell Citigroup based on the direction of the price of Gold.
As for Citi’s business plans going forward, the company wants to get back to giving sound advice, providing global transactions, making safe decisions, and the old-fashioned business of banking is what Citigroup wants to get back to. The revenues for Citigroup in Latin America rose +8% and in Asia the revenues rose +17%. As of now two thirds of the revenue is from Europe and North America. The emerging markets will outgrow the pace set in North America and Europe in the years to come so 50/50 could be the mix of revenues in the near future. Citigroup wants to get back to its highest margin businesses, namely private banking and corporate forecasting and advisory services in North America and Europe, while becoming the front runner in providing these services to emerging market economies. So is it a good time to buy citigroup stock?
In, conclusion it may not be until 2013 that the dividend is increased, and there is a consistent trend of underperformance within the bank when it comes to earnings as compared to similar Banks like JP Morgan or some German banks. But the beta play on Citi is undeniable. For those who want exposure to the financials and their healthy dividend payouts there are several hybrid mutual funds and dividend paying etf that give exposure to Citigroup as well as other financials and banking stocks. For those who like stock options, Citigroup does provide some good option strategy plays both on the call and put side.