Is Citigroup Inc (C) A Value Play?

Litigation

JPMorgan Chase & Co. (NYSE:JPM) has had its fair share of negative press due to its CEO Jamie Dimon. Dimon has been criticized by many members of the press, and has been in a horrible position. That’s because if the company’s position does not improve, he would be in a dilemma which would ultimately remove him from his executive positions. Many still believe that the company is not safe in his hands, and most analysts point out the fact that JPMorgan’s cash flow has dramatically plunged.

JPMorgan continues to face numerous lawsuits even though it has nearly been five years since the 2008 recession. From an investment point of view, this is pretty bad because it would take another five years for JPMorgan Chase & Co. (NYSE:JPM) to fix these legal issues. For example, a major ongoing lawsuit is independent foreclosing  in which 4.2 million families were affected. These are just some of the many reasons that lead me to believe that JPMorgan is not as good of a buy as Citigroup.

Although, many people believe that HSBC Holdings plc (ADR) (NYSE:HBC) is a far better buy than Citigroup, I disagree. The fundamentals behind this company are only so good. An example of this would be future growth and lawsuit issues. As far as lawsuits go, in December 2012, a money-laundering case with the U.S. government resulted in HSBC Holdings paying a $1.9 billion fine. While looking at a chart, I spotted a downward trend. This shows that shareholders are still nervous about these ongoing lawsuits.

Another factor includes Europe’s economy, since HSBC Holdings plc (ADR) (NYSE:HBC) is a European bank. A couple of years down the road, if the economy does not improve, Europe could be in a meltdown situation and HSBC’s stock price would massively decline.Some of these reasons lead me to believe that HSBC Holdings plc (ADR) (NYSE:HBC) is not a wise investment decision.

Conclusion

Citigroup is trading at low price-to-earnings multiple. The Fed may also allow Citigroup to initiate a share-buyback program, which in return would bring in a horde of cash and liquidity. I conceive that the bank will appreciate because its fundamentals and catalysts for growth show that it is bound for a return. I also believe that this stock is oversold, and will continue to be a good buy if the housing market continues to improve at these levels.

The article Citigroup Is Cheap Right Now originally appeared on Fool.com is written by Shazir Mucklai.

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