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Citigroup Inc (C), American International Group Inc (AIG), Wells Fargo & Co (WFC), Apple Inc. (AAPL): 4 Stocks I’m Re-Buying

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Or, I guess I should say two stocks I’m rere-buying and two stocks I’m rere-re-buying over the next few days. In the real money portfolio I manage for the Motley Fool, this’ll be my third nibble at Citigroup Inc (NYSE:C) and American International Group Inc (NYSE:AIG) and my fourth nibble at Wells Fargo & Co (NYSE:WFC) and Apple Inc. (NASDAQ:AAPL).

Call this a modified version of buying in thirds and of looking within your own portfolio for new purchases.

Before we get to the financial companies (which are the primary focus of my real money portfolio), let’s start with my rationale on the most-talked-about stock in the market.

Apple Inc. (NASDAQ:AAPL)

Apple Inc. (NASDAQ:AAPL)
It seems I’ve been catching a falling knife with Apple Inc. (NASDAQ:AAPL). As the stock price has fallen from its $700 highs, I’ve bought in at $529, $467, and $424… and now close to $400. I continue to be bullish because Apple Inc. (NASDAQ:AAPL) and its leader, Tim Cook, continue to “think different.” The financial press and armchair analysts alike have been spoiled by past success and are beating the drum for Apple Inc. (NASDAQ:AAPL) to wow us. Now! But panic hasn’t set in in Cupertino. Cook continues to play it methodically and close to the vest, allowing the world to speculate on TVs, watches, and cheaper iPhones.

Meanwhile, Cook broke with his cash-hoarding predecessor Steve Jobs by instituting dividends last year. He’s also increased the share buyback program from $10 billion to $60 billion to take advantage of these depressed stock prices. That’s in contrast to so many companies that do it backwards. The combination of dividends and timely share buybacks (as opposed to, say, ill-advised mega acquisitions) is great capital allocation — something Apple Inc. (NASDAQ:AAPL)’s been criticized for in the past.

Maybe the next big Apple Inc. (NASDAQ:AAPL) product will flop. And maybe Tim Cook will never fill Steve Jobs’ shoes. But Tim Cook is comfortable in his own. He has so far shown himself to be product-focused, not Wall Street or image-focused. At bargain basement price multiples, that’s plenty good enough for me.

American International Group Inc (NYSE:AIG), Wells Fargo & Co (NYSE:WFC), and Citigroup Inc (NYSE:C)
Now let’s get to the financial companies. Unlike Apple, these three are within spitting (AIG and Wells Fargo) or shouting (Citi) distance of their 52-week highs.

That said, I believe the recovery of the financial sector isn’t complete. We can see that most easily in the depressed price-to-tangible-book multiples. American International Group Inc (NYSE:AIG) is at just 0.6, Citigroup Inc (NYSE:C) is at 0.9, and Wells Fargo & Co (NYSE:WFC) is at 1.8. Their two-decade averages are 2.3, 2.8, and 3.3. It would take a fourfold stock price increase to get American International Group Inc (NYSE:AIG) to its historical average, and a threefold increase at Citigroup Inc (NYSE:C). At Wells Fargo & Co (NYSE:WFC), we’re still talking about an over 80% boost.

There are many, many reasons a simple comparison with past multiples can prove problematic. For example, bears on Citigroup Inc (NYSE:C) and Wells Fargo & Co (NYSE:WFC) would argue that regulations like Dodd-Frank and Basel III will constrain bank profitability versus what we’ve seen in the past (and therefore, investors will rightly pay lower multiples of book value). Still, we get some feel for the potential upside, here.

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