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Citigroup Inc (NYSE:C): A Bullish Investment Perspective

We came across a long thesis on Citigroup Inc (NYSE:C) on ValueInvestorsClub by MarAzul. In this article we will summarize the bulls’ thesis on C. The company’s shares were trading at $59.29 when this thesis was published, vs. closing price of $69.94 on Jan 2nd.

© dxc.com

Citigroup Inc (NYSE:C) is a global financial services company primarily offering cross-border banking needs for multinational corporates, investment banking and trading, and credit card services in the United States. The company is doing business in more than 100 countries and jurisdictions and organized its operations into five primary segments: services, markets, banking, US personal banking, and wealth management.

The bull thesis is based on the argument that the market underestimates future growth and profitability of the company which has simply set the bar too low – the stock trades at only 0.77x P/TBV multiple based on FY2024 data, which implies that market expectations are for the profitability to remain sluggish. The author argues that Citigroup Inc (NYSE:C) has to only reach 10% return on tangible equity (ROTE) for the stock to achieve a great return. This outcome seems realistic as the company is well-capitalized and has plenty of excess capital which provides a margin of safety. Another positive is the reversal of unrealized losses in the held-to-maturity book, which provides some uplift for TBV growth and equity. Furthermore, the author praises the company’s strategy of divesting complex business units and focuses on areas where they can at least earn the cost of capital. He believes C is following the right strategy of specializing in operations they excel at, which can boost profitability in the long-term. The IPO of the Mexican consumer division planned for 2025 is expected to be an important step in this direction.

All in all, the author believes that a base case scenario in which Citigroup Inc (NYSE:C) reaches 10% ROTE in 2 years would put the company’s earnings at $10.00 per share, which coupled with a 10.0x target multiple would yield a stock price of $100.00 per share, or 43% upside from the current market price. However, the most optimistic scenario presents a stock price as large as $150.00 per share plus dividends, implying at least 114% upside.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

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In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

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Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

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