Is Citigroup a Buy While It's Down?
Bank stocks tumbled Thursday on the news that the Federal Reserve expects benchmark interest rates to stay in the 0% range through 2022. The Fed also projected unemployment to come in around 10% and the GDP to contract 6.5% this year.
None of this is good news for banks, which rely on interest rates for interest income and GDP growth for loan revenue (and avoiding loan losses). While banks are better positioned to weather an economic downturn than they were in 2008, as they are required to hold more capital and credit quality is generally solid, the economy will take a while to recover. A report released in May by the International Monetary Fund said global banks will struggle to maintain profitability through 2025.
While banks have taken a beating during this downturn, valuations have come down sharply. The best place to find value is the large banks, whose scale and stability give them the best opportunity to outperform. One of the big four U.S. banks to consider is Citigroup (NYSE: C). Is Citigroup a buy while it's down?
Source Fool.com
