We recently published a list of 12 Best Affordable Stocks To Buy Right Now. In this article, we are going to take a look at where Citigroup Inc. (NYSE:C) stands against other best affordable stocks to buy.
Economic and Market Outlook 2025
There has been a growing debate regarding whether the economy of the United States will have a soft landing. A recent report by Vanguard titled “Beyond Landing” released on November 25 discusses the economic outlook for the year ahead. The report highlighted that global inflation has significantly decreased over the past two years, nearing the target of 2%. However, this decline has been inconsistent across different regions, with many developed markets experiencing slowdowns due to monetary policy adjustments. The United States stands out as an exception, showcasing robust economic growth and full employment despite restrictive monetary policies.
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The report raised critical questions about whether the US has achieved a “soft landing” or if high interest rates will eventually lead to a “hard landing.” The narrative has largely focused on the Federal Reserve’s ability to time rate cuts effectively to facilitate painless disinflation. Vanguard suggests that the strong growth and falling inflation in the US may be better explained by supply-side dynamics, such as increased labor productivity and a surge in available labor, rather than solely by Federal Reserve policies.
Regarding the 2025 outlook, the firm anticipates that US real GDP growth may decline from around 3% to closer to 2%, influenced by potential policy risks like trade tariffs and stricter immigration regulations. Core inflation is expected to remain above 2.5% for most of 2025. The firm also predicts that interest rates will stabilize at levels higher than those seen during the 2010s, fostering better returns in cash and fixed-income markets over the next decade. However, they express caution regarding equity markets due to elevated valuations. The report highlights a tension between momentum and valuation in risk assets, suggesting that while some stocks may continue to perform well, their high valuations could pose risks if economic conditions change unexpectedly.
Our Methodology
To compile the list of the 12 best affordable stocks to buy right now, we used the Finviz stock screener, Yahoo Finance, and Seeking Alpha. Using the screener we shortlisted stocks trading below a Forward P/E of 15, as of December 4, and that are expected to experience earnings growth this year. Next, we sorted our initial list by market capitalization and cross-checked the Forward P/E of each stock from Seeking Alpha and earnings growth from Yahoo Finance. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders as per Insider Monkey’s database for Q3 2024.
Why do we care about what hedge funds do? 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 Ratio: 11.93
Earnings Growth This Year: 6.10%
Number of Hedge Fund Holders: 88
Citigroup Inc. (NYSE:C) is a major financial services company that provides a wide range of banking and investment services. It operates in key banking areas including services, markets, banking, and wealth.
The company has been making significant strides in modernizing its technology infrastructure and improving operational efficiency. As part of its ongoing transformation, the company retired over 1,250 outdated applications from 2022, simplifying its systems to enhance performance and compliance. They also launched a new capacity planning tool, which has reduced the onboarding times for new applications from weeks to just days. Moreover, as a result of these transformations, Citigroup Inc.’s (NYSE:C) loan servicing platform has grown significantly, with live deals now valued at approximately $25 billion, as of the third quarter of 2024.
The fiscal third quarter of 2024 was a record quarter for its services segment and driven by fees, loans, and deposits. Management also announced its integration with Mastercard Move, enabling secure near-instant payments across 14 markets. Overall the total revenue of the bank improved 1% year-over-year to $20.3 billion. It is one of the best affordable stocks to buy right now.
Diamond Hill Capital Long-Short Fund stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:
“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”
Overall, C ranks 4th on our list of best affordable stocks to buy right now. While we acknowledge the potential of C to grow, 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.
