We recently published a list of 10 Most Profitable Value Stocks to Buy Now. In this article, we are going to take a look at where Citigroup Inc. (NYSE:C) stands against other profitable value stocks to buy now.
Matt Powers, Managing Partner at Powers Advisory Group, joined the discussion on CNBC’s ‘Power Lunch’ on March 11 to provide insights into the shift from growth to value investing and the resurgence of traditional dividend strategies. Powers emphasized that this transition has become increasingly evident, particularly following last week’s market activity and the events of March 10. He noted that while the market behavior on March 11 might tell a slightly different story, the broader trend is unmistakable. For years, growth stocks dominated portfolios, but now investors are gravitating toward value and dividend investing, which had been largely overlooked for over a decade. Powers attributed this shift to various catalysts, which included tariffs and policy uncertainty from Washington and President Trump’s unpredictable stances. He described investors as exhausted, and welcomed the normalization of equity markets and a return to diversification and traditional investing.
Powers highlighted the importance of diversification, contrasting high-growth portfolios with those focused on dividends. He pointed out that ETFs have outperformed large-cap growth funds year-to-date, with a notable 11-point difference in returns. The dividend fund is up 5%, while the large-cap growth fund is down 6%. He explained that tech stocks dominate large-cap growth funds and account for nearly half of their portfolios. In contrast, dividend-focused funds are more diversified across sectors such as healthcare, financials, and staples. This diversification reduces concentration risk and provides defensive characteristics in an uncertain market environment. Powers elaborated on the leadership shift between these two types of funds. While growth ETFs feature holdings like the MAG7, dividend ETFs focus on blue-chip companies. A year ago, growth stocks were investor favorites, but now value stocks are taking the lead, which is a trend reflected in their performance. He stressed the importance of broadening diversification within portfolios and not ignoring value opportunities.
Methodology
We sifted through the Finviz stock screener to compile a list of the top stocks with a forward P/E ratio under 15. We then selected the 10 stocks with a TTM net income greater than $1 billion and that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Note: All data was recorded on March 13.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A financial advisor in a suit, pen in hand, talking to a client in the bank.
Citigroup Inc. (NYSE:C)
TTM Net Income as of March 13: $12.682 billion
Forward P/E Ratio as of March 13: 9
Number of Hedge Fund Holders: 101
Citigroup Inc. (NYSE:C) is a financial services company that provides a spectrum of products and services to diverse clients. It operates through five segments: Services, Markets, Banking, US Personal Banking, and Wealth. It offers services ranging from treasury and trade solutions to investment banking and wealth management.
The firm’s Services division drives most of its revenue and includes the Treasury and Trade Solutions (TTS) and Security Services. In 2024, it reached a record year, with revenues climbing 9% year-over-year to $19.6 billion. This growth occurred despite a low-interest-rate environment. This success is driven by significant market share gains in both TTS and Security Services, which was highlighted by a decade-high performance in the Q4. This performance is underpinned by strong underlying fee drivers, which include US dollar clearing, commercial card spend, cross-border transactions, and assets under custody.
Citigroup Inc. (NYSE:C) aims to solidify its leadership with large institutions and expand its commercial client market share within TTS. It’s also looking to invest in digital and data capabilities to deepen relationships with asset managers and owners within Security Services. Continuous investment in technology and platform modernization remains a priority.
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 4th on our list of the most profitable value stocks to buy now. While we acknowledge the growth potential of C as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than 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.