I personally think he is very light in his projections. The banks have had a free ride for four years at the expense of the tax paying public by borrowing money at zero and buying gov't bonds at 2-3% pocketing the profit and building risk free capitalization. This could continue for another two years at which time Citi and others could be worth 6-10 times todays price especially when they really start making loans again instead of just collecting fees and interest spreads on gov't paper. Citi is a no brainer for a double no can argue otherwise who knows anything about what is happening in the banking sector.
"...............This could continue for another two years at which time Citi and others could be worth 6-10 times todays price especially when they really start making loans again instead of just collecting fees and interest spreads on gov't paper."
You might want to take a look at C's financials to understand what's really happening with C, what it's assets are, where it gets its revenues, the net income, projections,.... let alone the banking sector. You also might want to research what the Fed is actually doing with QE infinity, the mere mention of which spooks the stock market like a Catholic priest running a daycare spooks a responsible parent.
But more importantly, C's current market cap is $150 billion. At it's peak in 2007, when it earned double what it has earned in the last 12 months, C's market cap was in the mid $200 billions,.... and yet you think C's market cap is worth 10 times more than it currently is or $1.5 trillion..... And that's regardless (and/or ignorant) of the fact that the largest market cap of all publicly traded companies (Apple) is about $450 billion.
Anyone who thinks C, who has never earned more than $20 billion in a year, who currently earns $10 billion per year, is worth over 3 times Apple who earns $40 billion per year, just doesn't understand fundamental common sense, let alone the banking sector.
Yeah? And in what Universe or time frame will THAT happen? Don't get me wrong...I've been playing the likes of BAC/C/JPM and others since the 2008 melt-down. And got sizable positions in the sector from that era so the basis is about what you'd expect. But doubling from current valuations? Hmmmm....by reverse split maaaybe....wait...C's already done that. Heh! Anyway, hard to see that with current number of shares outstanding. But if they BOTH were to do this I'd hire a window in Macy's on 34tth Street (NYC) and ask him to come stand in it so I could kiss his hairy behind in thanks. ;-)
And in 2011 Cramer said C would be $12 ($120) in 2012.
Obviously he and Bove didn't and don't have the mental capacity to understand-
At C's peak market cap, at the height of the housing bubble the summer of 2007, right before the subprime loan default dam bust-
C's Revenues - $100 billion/yr
C's Earnings - $20 billion/yr
C's Market Cap - $240 billion, at C's current float, that would be a stock price of $80 (not the $100 or $120). But unfortunately,....
C's current stats-
C's Revenues - $71 billion/yr TTM, ($30 billion below $100 billion).
C's Earnings - $10 billion TTM, ($10 billion below $20 billion).
C's Market Cap - $155 billion
Projections for 2014 uon.
C's Revenues $81 Billion, (still $20 billion below $100 billion).
C's Earnings $16 Billion, (still $4 billion below $20 billion).
C's Earnings x 10 = $160 Billion
C's Current Market Cap $156 Billion
C's Current Dividend $0.04/shr (0.10 %)
The others for comparison -
Revenues $92 Billion
Earnings $14 Billion
Earnings x 10 = $140 Billion
Current Market Cap $156 Billion
Current Dividend $0.04/shr (0.30 %)
Revenues $87 Billion
Earnings $20 Billion
Earnings x 10 = $200 Billion
Current Market Cap $230 Billion
Current Dividend $1.20/shr (2.8 %)
Revenues $102 Billion
Earnings $23 Billion
Earnings x 10 = $230 Billion
Current Market Cap $210 Billion
Current Dividend $1.52/shr (2.8 %)
....are in better positions, but you and Bove think C is going to $100????
"Goldman Sachs, in a research report earlier this month, ranked financials among the weakest S&P 500 industry sectors in terms of value and growth. The tech sector earned the highest marks.
Others contend that the financial sector's advance over tech can be healthy for the economy, so long as the market cap of the financial index does not swell to levels that historically have proved unsustainable."
That's a very interesting analysis. Thanks for taking the time to enter all of that data.
Your numbers imply that C had a P/E of 12 at the height of the bubble (and bull market) in 2007. This doesn't seem plausible does it? Where did you get those numbers from, especially the market cap of $240 billion?
C's current P/E is 16. Why are you using a P/E of 10 for 2014? With a P/E of 16, market cap in 2014 should be $256 billion, no?
Why are you using P/Es of 10 for BAC, WFC and JPM?
Last week, Goldman Sachs included CLF in their 40 most overbought stocks. CLF has made profit in every quarter except Q4 2012. Its revenue and profit has increased in Q2 2013 over Q1 2013. Stock is at near 2.5 year low. P/B was at .65. It has one of the highest short interest in the S&P 500. Yet Goldman says that CLF was overbought. Their sentiment seems to be in the rear view mirror.