This is the week for the bank picks.
Many says that the economy will be driven by construction. Yes BUT if banks do not lend than there is no new construction coming into the market.
Where is the starting point: profit. When banks starts to make more profit they start making more loans and the last 3 banks that have reported have indicated just that: more profit and more loans than expected. Sure expectations were very low as a very slow recovery has been taken into account but again this morning look at Citigroup and the result on pre-market trading for having beat the estimations. They are trading at near +4%
It also makes me believe that larger banks will make more profit lending to big boys and then it will echoed to smaller banks, namely regionals, all over the place as long as these banks have been prudent. The wheel has started to spin in the right direction!
So this morning, i will be adding some Citigroup but watching carefully the opening trend as it seems that 4% gain in pre-market is a bit high but nevertheless, under 30$ it is still really cheap for Citigroup as their P/E ration is under 8, their price to book value really dirt cheap (0,44), and is evaluated the lowest compared to other large banks.
NOW, if Citigroup was to officially announce a dividend increase watch out for a rapid recovery. Not that long ago (march 2012) Citigroup was trading at 38$. It took 4 months to lose 25% of it's value BUT the rise could be a lot faster.
I do believe Citigroup will trade over 40$ by year end so this is a great time for accumulation and a close to 40% increase in value over the next 6 months.
As usual (and more actually) DO NOT INVEST MORE THAN YOU CAN AFFORD TO LOSE and always do your own due diligence before investing in any stock. CHEAP SHARE PRICE does not necessary mean a real bargain. Play with extreme caution.
Get THE PLAY OF THE DAY on Twitter : @investman2
Many says that the economy will be driven by construction. Yes BUT if banks do not lend than there is no new construction coming into the market.
Where is the starting point: profit. When banks starts to make more profit they start making more loans and the last 3 banks that have reported have indicated just that: more profit and more loans than expected. Sure expectations were very low as a very slow recovery has been taken into account but again this morning look at Citigroup and the result on pre-market trading for having beat the estimations. They are trading at near +4%
It also makes me believe that larger banks will make more profit lending to big boys and then it will echoed to smaller banks, namely regionals, all over the place as long as these banks have been prudent. The wheel has started to spin in the right direction!
So this morning, i will be adding some Citigroup but watching carefully the opening trend as it seems that 4% gain in pre-market is a bit high but nevertheless, under 30$ it is still really cheap for Citigroup as their P/E ration is under 8, their price to book value really dirt cheap (0,44), and is evaluated the lowest compared to other large banks.
NOW, if Citigroup was to officially announce a dividend increase watch out for a rapid recovery. Not that long ago (march 2012) Citigroup was trading at 38$. It took 4 months to lose 25% of it's value BUT the rise could be a lot faster.
I do believe Citigroup will trade over 40$ by year end so this is a great time for accumulation and a close to 40% increase in value over the next 6 months.
As usual (and more actually) DO NOT INVEST MORE THAN YOU CAN AFFORD TO LOSE and always do your own due diligence before investing in any stock. CHEAP SHARE PRICE does not necessary mean a real bargain. Play with extreme caution.
Get THE PLAY OF THE DAY on Twitter : @investman2
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