We recently published a list of the 13 Most Undervalued Blue Chip Stocks To Buy According To Analysts. In this article, we are going to take a look at where Citigroup Inc. (NYSE:C) stands against other most undervalued blue chip stocks to buy according to analysts.

“Now is the Time to Revisit Portfolios”

The Fed went through with a 50 basis point cut and as things have started to get clear, investors must give their portfolio another look. On September 20, Matt Stucky, Northwestern Mutual Wealth Management’s chief equities portfolio manager, appeared in an interview on Yahoo Finance to discuss why and how investors must revisit their portfolios.

He suggested that now is the perfect time for investors to sit down and reassess their investments with the help of advisors. Stucky highlights that there is currently $6.3 trillion sitting in money market funds in the asset class, which may not be as attractive after the 50 basis point cut went through. He urged investors to consider a rather diversified portfolio and suggested that sitting on cash alone is risky.

He reiterated that while investors do not need to alter their long-term strategic goals, the ones with idle cash must try to allocate or deploy that money in other investment classes. According to Stucky, garnering a solid yield or return on investment does not come without risk and investors must understand that with the current Fed decision on board, it is impossible to get that kind of yield from cash alone.

What Does the Cut Signal?

On September 19, Dennis Lockhart, Former president of the Federal Reserve Bank of Atlanta, appeared in an interview on Yahoo Finance to discuss the aftermath of the rate cut. According to Lockhart, the rate cut was perfectly balanced and rather optimistic in nature.

He believes that the Fed’s decision was not reactionary to anything going on in the market or the economy. The Fed is particularly confident about the inflation rate, the labor market, and the soft landing of the economy.

Lockhart suggested that the Fed will reroute and remain flexible based on how the economy is performing from meeting to meeting. According to him, the Fed will aim to maintain flexibility and the 50 basis point cut was more like a compensation to what should have happened in July.

Our Methodology

To come up with the 13 most undervalued blue chip stocks to buy according to analysts we examined multiple similar rankings, our own rankings, and ETFs to come up with the best blue chip stocks. We then chose stocks with a forward P/E ratio that was less than the S&P 500’s (22.68, as of September 22). Finally, we ranked the shortlisted stocks in ascending order of the analyst upside potential, as of September 22, 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Citigroup Inc. (NYSE:C)

Forward P/E, as of September 22: 10.7

Analyst Upside Potential, as of September 22: 14%

Number of Hedge Fund Holders: 85

Citigroup Inc. (NYSE:C) is one of the most undervalued blue chip stocks to buy according to analysts. The investment banking giant is based in New York and engages in the provision of asset management services, risk management services, investment management services, mortgage loans, credit cards, and other banking commodities.

In the second quarter of 2024, the company logged $20.1 billion in revenue and $3.2 billion in net income, up from $19.4 billion in revenue and $2.9 billion in net income from Q2 2023. Of this, its investment banking segment showed promising results and increased revenue by 38%

Citigroup Inc. (NYSE:C) has an on-ground presence in 90 countries, issues currencies in 144 countries, and has trading floors in 77 countries. Despite having such an extravagant network, the company is strongly inclined to expand. Previously, Citigroup Inc. (NYSE:C) launched commercial banking services in Japan. Moreover, the company also collaborated with Emirates NBD, a leading banking group, allowing corporate and retail clients in the Middle East, North Africa, and Turkiye to make USD payments anytime they want.

Overall, Citigroup Inc. (NYSE:C) is one of the most important names in the banking sector because of its expansive network and strong ecosystem. The company continues to enhance its position by initiating strategic partnerships with entities from across the globe.

Analysts are also bullish on C and their 12-month median price target of $71 points to a 14% upside from current levels. In Q2 2024, there were 85 hedge funds that held positions in the stock with total stakes amounting to $10.64 billion. As of June 30, Berkshire Hathaway was the largest shareholder with a position worth $3.51 billion.

Patient Capital Management stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:

“Citigroup Inc. (NYSE:C) gained 24.1% in the quarter continuing its uptrend from 4Q. The company is on a multi-year journey to reorganize the business and reach return on tangible common equity of 11-12% by 2026 (and higher further out). Citigroup is finally taking the hard actions necessary, cutting unprofitable departments, taking out middle management layers, and reducing overall headcount. As of early March, the company was 70% done with its business exits and had reduced management layers by 1/4th. We have high confidence Citi will hit its targets. In the meantime, the company is returning cash to shareholders, which could meaningfully increase if the Basel III capital proposal is changed.”

Overall, C ranks 8th on our list of most undervalued blue chip stocks to buy according to analysts. While we acknowledge the potential of C as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than C but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.