Five Reasons Citi's Worth the Long Risk

| About: Citigroup Inc. (C)

Citigroup IncCitigroup (NYSE:C) has to be one the hardest hit stocks I’ve seen since Nortel in early 2000. Only they don’t exactly have accounting fraud on their shoulders, just a really ugly looking portfolio.

But is it really that ugly? Here are my five reasons you should buy Citigroup Today:

  1. Valuation is absurd.
    Despite being one of the largest banks in the World, the market has given it a price of $8.1B. They have over $150B in equity.
  2. Mortgages will pick-up long term
    Yes, Citigroup’s mortgage related-assets are a mess right now while the US is in a housing slump. The market has priced a worst-case scenario, that all house prices drop to zero (or close to it).
  3. Invincible
    Sounds cliché, but the US government will not let Citigroup fall. They’ve already put their money where their mouth is.
  4. Bounce-Back factor
    The harder they fall, the higher they usually bounce.
  5. Citigroup has massive international exposure
    If you don’t believe the US economy will recover, Citigroup is still present in over 30 countries.

Will the short-term look bad as we continue to squeeze liquidity from the banks? Yes, it’s going to be rough. Will Citigroup be upwards of $10/share in less than 5 years? All signs point to yes.

Disclosure: Author has a long position in Citigroup.

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