We recently published a list of the Analyst Says These 10 Stocks Can Benefit if Donald Trump Wins US Election 2024. Since Citigroup Inc (NYSE:C) ranks 2nd on the list, it deserves a deeper look.
Wolfe Research said in a note earlier this month that the odds have shifted in favor of Donald Trump following the first presidential debate. However, the firm believes we can see several “unexpected twists and turns” ahead. Wolfe Research also shared a list of stocks that could be potential winners should Donald Trump become the President of the US.
What could happen if Donald Trump becomes President of the US has been a topic of debate and discussion on Wall Street over the past several months. In late January, when the Russell 2000 index jumped, Zhiwei Ren, portfolio manager at Penn Mutual Asset Management, reportedly said that investors might be flocking to the “Trump Trade.” The Russell 2000 is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. Ren said, according to Wall Street Journal, that since Trump is a supporter of low interest rates and less regulation, small-cap stocks, which thrive under Dovish economic policies, were reacting positively to the increasing chances of Donald Trump becoming the leading Republican candidate for the upcoming elections.
In this article, we first scanned Wolfe Research’s basket of stocks the firm believes could be potential winners in case of a Trump presidency. From these stocks we picked 10 companies with the highest number of hedge fund investors.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Citigroup Inc (NYSE:C)
Number of Hedge Fund Investors: 94
With an over 3% dividend yield and P/E of under 20, Citigroup is a notable financial stock that Wolfe Research believes could benefit if Donald Trump comes to power.
Analysts at BofA expect Citi to clock in EPS growth of 8% this year. According to Yahoo Finance data, Citigroup Inc’s (NYSE:C) EPS estimate for the next year (2025) is around $7.21. Assuming the banking sector’s average multiple of 10.32, the stock is currently undervalued. Wall Street’s average analyst estimate for Citigroup Inc (NYSE:C) is $66, while the stock was trading at around $62 as of June 1.
Warren Buffett, Leon Cooperman, Ken Fisher, Cliff Asness, Israel Englander – the list of billionaires having stakes in Citigroup Inc (NYSE:C) is long, thanks to Citigroup Inc’s (NYSE:C) strong fundamentals and dividend history. Citigroup Inc (NYSE:C) has upped its dividend every year since 2011. Citigroup Inc (NYSE:C) expects annual revenue growth of about 4%-5% by 2026, and it’s targeting an 11-12% return on tangible common equity in the same period.
Citigroup ranks fourth among major U.S. banks in terms of deposits and net loans. As of Q1, Citigroup reported total deposits of $1.307 trillion and net loans of $656.3 billion. Additionally, Citigroup has the lowest percentage of non-interest-bearing deposits to total deposits at 15.3%.
The company’s “Project Bora Bora” is expected to rake in huge cost savings. It resulted in 7,000 job cuts and anticipated annual savings of $1.5 billion. Citigroup plans to cut a total of 20,000 jobs globally over the next two years. The company also plans to fully or partially exit several markets, including Mexico, South Korea, Russia, and China. Recently, it sold its Consumer Wealth portfolio in China to HSBC and plans to transfer its Chinese credit card portfolio to Fubon Bank. However, Citigroup still plans to establish a China-based investment bank by the end of the year.
Diamond Hill Capital Long-Short Fund stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:
“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”
Overall, Citigroup Inc (NYSE:C) ranks 2nd on Insider Monkey’s list titled Analyst Says These 10 Stocks Can Benefit if Donald Trump Wins US Election 2024. While we acknowledge the potential of Citigroup Inc (NYSE:C), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Citigroup Inc (NYSE:C) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.