Citigroup Shares Mimic Rocket Ship
You have to excuse any recent Citigroup (NYSE:C) investors who are walking around with giant grins on their faces. In the last few months investments in C common stock have proved to be incredibly profitably. Today is no exception.
Investors appear to getting a lot more bullish about the economy, and this sentiment is clearly being illustrated in the financial sector.
Last October, C shares were trading for $23.50 a share. Investors are undoubtedly feeling that if they can get in now, the shares might have a chance at reaching those lofty levels again.
Citigroup's problems are not behind the company just yet. They still have to repay the government for the $45 billion they took in TARP funds. They are still struggling with toxic assets and high default rates. But the company is raising cash through asset sales and recent stock price increases seem to indicate a growing confidence in the job being done by CEO Vikram Pandit.
C shares were completely hammered based on pressure from both the consumer and commercial lending segments. They have wrote down a number of toxic assets and will need to continue to pare their poor holdings all the while increasing the cash flow and eventual profits.
The company also faces issues concerning executive compensation. Government regulators seek to limit the amount of money employees of C can earn, which might make recruitment of key individuals difficult.
Right now it appears that investors have taken these challenges into account but remain bullish that the company can do something about their troubles in a relatively short period of time. If they do, people buying in under $5 per shares stand to be amply rewarded.
Courtesy: WSE
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