Citigroup cutting costs, time for a look

Citigroup Inc. (Public, NYSE:C) is cutting it's Securities Unit by 5% to save money and improve the bottom line.  Yet another reason for investors and Citi shareholders to come along for the ride. Just yesterday I wrote: It’s time to look at Citigroup (C), if you passed on it, time to take another look.

In January the big C said it would trim 4,200 jobs and reduce year-end bonuses for top executives that already have 5 houses and 3 yachts.  Guess the $18.1 billion in writedowns on subprime home loans and bonds didn't feel so good?

Citigroup shares are down 28% this year and their forward P/E for 2009 is all the way down to 5.98. That’s dirt cheap, even JP Morgan (JPM), the new superhero of Wall Street, has a forward P/E of 10.12. Book Value of Citigroup is 22.74, currently above their share price, while JPM’s is 36.59, currently below the share price.

Citgroup 1 Year Chart:

Granted, Citigroup does have problems. But I like the low short ratio of  only 2.4%, I like the Dividend Yield of 6.9%, I like the stake they have in Visa (V) and I like that the subprime mess is already priced into the stock. All that’s left to do now is buy and hold for the long term, because when the short term problems that are holding the stock down are ironed out, Citigroup is going back up to +$30. 

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

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