Citigroup Inc. (C)

Has basically come out of the blue in the last week. If this was trading at the same valuation as Toronto Dominion Bank (TD-T) you’d be $86 but actually closed at $53.27. Has any percent upside to his calculated model price. Dividend yield of 0.08%.

This is the industry that lead us into the 07/08 crisis. Now the company is transitioned into a retail machine and 65% of earnings come from outside US. Deferred tax asset. It is low risk.

Trading at a reasonable multiple, 80% of tangible book value. She sees stable margins and loan growth. It is slowing down a bit but the margins are still there. They have been able to come out of the crisis over the last few years. There is still a fair amount of upside here.

Came out last week with very, very good earnings. Trading below tangible book value. They have improving ROE. They keep selling off problem assets and now they are releasing reserves from holdings.

Hasn’t been a fan of this company, its management and its business model for quite some time. He is favourable towards US banks and financials, but more the regional banks than the big multinational players. (See Top Picks.)

Financials in the last couple of weeks have started to roll over. Hopefully, we are about to come into some support. It looks like it will visit $40.

When looking at the earnings going forward, it should get a 10 multiple and north of $5 in earnings. This should trade through $50. Thinks it is part of the recovery in the US banking sector and the housing sector as well. Still trading at a discount to Book Value.

They have just made a couple of major changes. They changed their CEO and they also started a very large rationalization of their workforce, announcing a layoff of 11,000 employees. They are carving costs out of the P&L so their profits grow quickly even if their revenues grow slowly.

(Market Call Minute.) New CEO. Has a nice emerging market retail franchise.

US banks are great opportunities in general. Holds BAC-N, but C-N is very oriented to New York and BAC-N is more global. Housing market is improving rapidly in the US and housing prices are going up and this is health for the US consumer. Thinks the US will start to re-finance again. Loan losses are going down, reserves are going down. It is a great time to own these stocks. Dividends will increase in the next couple of years.

New CEO. He is not in love with this one like many on the street are. It is well capitalized. Doesn’t expect huge amounts of growth. Would prefer JP Morgan or Bank or America.

If holding for 7-10 years then this is a level to buy it at. Bear in mind where the US is in the economic recovery. It is on the upswing. Is not interested in this for a shorter term hold.

Having a nice rally. He would use a 100 day moving average as the stop. $31.57 right now. A break out would be if it got above $37.92. $38.65 would be where you would start buying. $33.60 would be the stop and where he sees support.

Financial sector has been leading other sectors by quite a bit other than today. News from yesterday’s election has put at bit of a dent in some of the financials. On the one hand, this will benefit from the seemingly recovering housing market but of course they have international operations that may affect it as well. He would prefer the J.P. Morgan (JPM-N) and Goldman Sachs (GS-N) type of banks.

Have a new CEO which is good news. Very cheap. Obviously have some historical issues and they will do better in this environment. He would prefer something like Wells Fargo (WFC-N) or even Bank of America (BAC-N) or J.P. Morgan (JPM-N).