C: CITIGROUP undervalued

Citigroup and their investors have been plowed by a roughly 93% loss in share price, compared to around a 31% devaluation of the entire S&P 500 (Approx. March 2009). With such staggering losses, it may seem hard to invest in what is easily viewed as a tumultuous and volatile company; Citi has great potential as both a long and short term investment. Analyst reports suggest similar results. S&P upgraded the stock from a three to a four star rating in August of 2009, Reuters also has rated the stock as Outperform, meaning they believe it is in the top 30% of expected earnings of all stocks they analyze. Reuters upgraded Citigroup very recently (10.9.09). The only analyst believing the stock is a hold as opposed to a buy is the First Call Consensus. Their Analysts (13/15) believe it is prudent to hold or buy the stock. 5 believe the stock should be bought, while 8 consider it best to hold the stock. Only 2 of the Analysts believe the stock to be negative. 1 believes it will continue to be an under performer, while the last believes it is best to sell. The reports of these three companies show a significant belief that Citi has both the potential and ability to bounce back. While we can certainly expect bumps along the road, the stock is a worthwhile investment in terms of risk/reward. This is supported additionally be the fact the company has outperformed analyst expectations of EPS in the second quarter consistently since 2007. At this point, those of us invested in Citi are waiting for the 15th of October to see how this company (along with major others) has performed. The next few weeks are going to provide a major insight into the potential of this company. With the cutbacks in unnecessary spending as well as sale of some assets, Citi will hopefully show signs of life again. Overall, the company has trimmed their fat, cut their spending and under far more scrutiny from the Fed. Put all of this together and you have, at least in my mind, a stock with great potential for the short and long term.