InvestmentLocker – Citigroup (C) – March 23, 2022

The Arena

No one really knows which way the market will trend for the remainder of 2022 or beyond. However, with uncertainty and volatility seemingly at a high we may be witnessing a giant opportunity. As I see it, during periods of greater than average confusion many investors opt to pull their money from equities with hopes of parking it somewhere “safer”. This reality could serve as the opportunity to buy strong companies at discounted prices. While the outflow of money may continue for an undefined period of time and therefore losses. Eventually, I believe, we’ll see share prices level off before moving higher.

For any trader or investor having traveled this street more than once, I believe we know, when share prices start to rise they often do so ferociously, as several factors unfold. First, early birds enter the market to stop the downward trend and the net outflow of funds. Shortly after, savvy investors take notice and pile in forcing the asset to a “fair” value, possibly higher. Finally, and likely the group we’ve been in more often than not, the largest move occurs, everyone takes notice and the share price moves to an unstable high. At which time, early investors take their money off the table and the cycle starts to repeat. This is all my opinion of course, but we may be seeing such a scenario in Citigroup unfolding. Follow along below to find out more on why I believe now may be the ideal time to consider this large cap.

The Coach

Citigroup completed the second top of a clear long term double top way back in May of 2021. At that point, prices fell dramatically before experiencing a relatively tight range followed by a break to the downside. At this point its unclear when, or even if, this downtrend may end. Alternatively, Citigroup may simply be seeing the start of yet another trading range that eventually results in a lower price. Only time can tell.

If the bull can return then it would start with prudent investors taking notice of a stock that has, in my opinion, been unfavorably pushed lower to what I now think is a value area. From my research, the current book value per share is around $102/share. At the current share price of $57.50, that’s a staggering 56% discount on what the company and its assets could sell for if liquidated today. Now, before you run out and buy every share possible, understand that my data could be inaccurate. And therefore, unreliable to make such a decision.

On the other hand, Citigroup is such a large stock, to move its share price will take billions. In that light, investing any money into this stock before the uptrend has officially started makes it, quite possibly, an unnecessary risk in the face of an ever risky marketplace. Just be sure you’ve weighed all the factors.

Can the bull take over and drive this bear higher? No one knows, in the meantime here is an article from PandaForecast.com that may offer some much needed clarity on Citigroup’s next move.

The Attack

If you believe now is the time to act then you may consider a bullish position in Citigroup before the masses pile in. Additionally, if we’re honest with one another, how many times have you reviewed a company, forgone the opportunity to invest, and watched the share price soar? I know I have more times than I can count. Interestingly, it seems to be those stocks I “really believe” will move immediately that I do actually purchase, just in time to watch the share price tumble and trip over itself on the way to a new low.

In contrast, should you believe this stock is destined for its pandemic lows, then you may consider a short position or possibly a LEAP long put to capitalize on the upcoming move lower. Without a crystal ball there isn’t a way to know if or when that may happen so opting for more time to be right makes sense, given the price movement over the past two years.