Citigroup Corp
With the subprime worries and realities growing out of control, it's not surprising to see a lot of stable Financial and Insurance companies taking massive hits across the board. Just last week, Citigroup wrote off a colossal 18.1 billion amid the subprime fallout. Is the worst already out there? Will things get worse?
The short to medium term outlook is muddy at best. The economy and the markets have taken some massive hits in the past week with recession concerns. In fact, some analysts even claim that we are in the midst of a recession right now.
Will they do better?
With all this negative buzz out there, does it make sense to try to understand a stock like Citigroup? Let's look at some fundamentals. Their P/E is at an almost all time low of just 7.1. Their price to book ratio is 1.11. At these prices, I'm sure a lot of value investors are salivating. But hold on, with all the turmoil due to sub-prime difficulties, are things going to get better or do you think they'll get worse? Or heck they might do a lot better.
Less competition is good right
Let's look at it this way. With all these mortgage lenders going out of business and being scooped up by large banks (see Bank of America and their recent purchase of Countrywide Financial), what this means is there will be less competition in the mortgage space. I'm not saying that things will get better overnight, but in the long run, with fewer players in the mortgage business space, they will do better longer term.
Citigroup shares fall to 1998 levels
In the short term, as I said before things are looking muddy. If you however, believe that this is a great long term story, this might be a good time to purchase your shares, stuff them under your mattress and then take them out in 20 years.
The short to medium term outlook is muddy at best. The economy and the markets have taken some massive hits in the past week with recession concerns. In fact, some analysts even claim that we are in the midst of a recession right now.
Will they do better?
With all this negative buzz out there, does it make sense to try to understand a stock like Citigroup? Let's look at some fundamentals. Their P/E is at an almost all time low of just 7.1. Their price to book ratio is 1.11. At these prices, I'm sure a lot of value investors are salivating. But hold on, with all the turmoil due to sub-prime difficulties, are things going to get better or do you think they'll get worse? Or heck they might do a lot better.
Less competition is good right
Let's look at it this way. With all these mortgage lenders going out of business and being scooped up by large banks (see Bank of America and their recent purchase of Countrywide Financial), what this means is there will be less competition in the mortgage space. I'm not saying that things will get better overnight, but in the long run, with fewer players in the mortgage business space, they will do better longer term.
Citigroup shares fall to 1998 levels
In the short term, as I said before things are looking muddy. If you however, believe that this is a great long term story, this might be a good time to purchase your shares, stuff them under your mattress and then take them out in 20 years.
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