Citigroup Inc (C) — This diversified global financial company, which provides a wide range of services to retail and corporate customers, should benefit from several recent developments.
Financial stocks rallied Friday on a better-than-expected jobs report, as some took the strength as a signal that the Federal Reserve may raise interest rates sooner than previously expected. And the U.S. housing recovery should directly benefit Citigroup because of its concentration in mortgages.
Since the financial meltdown, management focused on containing personnel costs while growing the core business. S&P Capital IQ said capital levels are strong and should be high enough to exceed federal guidelines through 2018. Its analysts estimate 2014 operating earnings will increase 6% to $4.60 per share, and 2015 earnings will jump 16% to $5.35 per share.
Zacks issued a research report stating it was optimistic on C stock due to the company’s efforts to grow revenue and streamline operations. Third-quarter revenue increased 9% year over year to $19.6 billion. And Zacks’ analysts noted Citi plans to exit the consumer banking business in 11 international markets and “focus on markets where it has a strong presence and long-term growth prospects.”
C stock broke from a deep “V” last week on high volume. Momentum turned positive, and MACD flashed a buy signal. The gap up from $54 has a trading target of $62.
This appears to be a major breakout that could have an impact on all profitable financial institutions, so long-term investors may wish to buy C stock at the market as a cornerstone large-cap holding in the financial sector.
