"One way to keep momentum going is to have constantly greater goals." - Michael Korda
Citicorp (C) has done well since I took a position and profiled it in late October. Shares are up some 10% since then. However, these cheap shares keep racking up positive catalysts and the stock should have further upside in 2013.
Recent positives for Citigroup:
- Stern Agee upgraded the shares from a "Neutral" to a "Buy" this morning. The company cites Citi's new CEO as a "game changer" (which is one of the key reasons I took a position in October).
- Consensus earnings estimates for FY2013 continue to rise. Consensus earnings have moved up 12 cents a share in the last three months to $4.65.
- Credit card delinquencies just reached their lowest levels in 18 years.
- The housing recovery continues to gain momentum and prices for homes actually posted gains in 2012.
4 Reasons C still has value at $41 a share:
- The stock is still selling for less than 80% of book value.
- C is priced at less than 9x forward earnings and 7x operating cash flow.
- With a new CEO in place and improving fundamentals, I would expect the company to be able to gain permission from regulators to substantially increase its dividend in 2013.
- In addition to Stern Agee, Credit Suisse is positive on the stock. Credit Suisse has an "Outperform" rating and $48 price target on the shares. S&P maintains a "Buy" rating.
Disclosure: I am long C.
