Citigroup Investors Urged To Take Profits
According to Barron's, Citigroup (NYSE:C) investors should take profits now that company shares have had a meteoric rise in such a short amount of time.
The financial newspaper said in its August 31 edition that further gains in share price for Citigroup are likely to be limited. The article also urged investors to take profits from C and put them into other, more attractive bank stocks.
Citigroup shares ended the trading week on Friday at $5.23 a share.
Certainly no one ever went broke taking profits, as the old saying goes, but investors in C should also be tempted to hold shares to see if the gains can continue, at least for awhile, contrary to what the report in Barron's says.
The major concerns for anyone holding this stock are that credit quality for consumers and businesses continues to deteriorate. With the amount of money that C has loaned out, any further degradation in either the consumer or business markets could prove devastating.
For investor who have followed C for a long period of time, the current market cap must look attractive. C traditionally had the largest market cap of all financial companies, but is far down the list now and is trading for a small percentage of its historical value. Of course this could be an accurate reflection of the company's prospects going forward, or it could indicate room to grow. Right now much depends on the turnaround being executed at the company.
Another concern for anyone thinking of putting money in this stock is what the affect of dilution will be. Even industry experts are unsure exactly what will occur in the next several weeks concerning that key factor.
On the positive side, clearly many are piling into the stock. Momentum has a way of pushing stock prices higher, regardless of what's happening fundamentally.
For anyone who is truly long, C still looks like a buy. The company is executing a turnaround and has divested itself of many toxic assets. The balance sheet has been tightened up and the imminent threat of failure has diminished. The company has a massive global reach that few companies can dream of duplicating. The key to success at C will be how well current management executes, and how well the overall economy rebounds.
Even at $5.23 a share, C stock could very well prove a bargain for long term investors who are not afraid of a considerable amount of risk.
Courtesy: WSE
Copyright 2007-2009 by Times of the Internet. All Rights Reserved.
