This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Citigroup, BofA to Sextuple by 2015?

NEW YORK ( TheStreet) -- Feeling gloomy about Citigroup (C - Get Report), Bank of America (BAC - Get Report) and other bank stocks? You need some Dick Bove in your life.

Dick Bove , as watchers of bank stocks know, is the veteran bank analyst with Rochdale Securities whose energy belies his 69-odd years. He is never afraid to go out on a limb, and while many analysts are pounding the table on back stocks right now, it's hard to find a bigger optimist these days than Bove.

That's not to say that Bove is a perma-bull. A 2005 report he wrote called "This Powder Keg Is Ready To Blow," gives him a legitimate claim to stand alongside that select group of stock pickers credited with having foreseen the banking crisis of 2008.

But Bove has been bullish for some time, and the latest selloff in bank stocks does not appear to have dimmed his view of the sector in the slightest. On the contrary, the selloff is only driving the bank analyst to cry more loudly about the bargains he believes are available in the sector.

Bove stated in a report published Tuesday that Citigroup will be worth $24.75 per share in 2015, more than 6.5 times Monday's closing price of $3.78 and twice the book value he is projecting for the bank in that year. Assuming Citigroup can attain the $12.37 book value Bove is projecting, that $24.75 price would not be far-fetched by historical standards. Citigroup has traded at a price-to-book ratio as low as 0.19 and as high as 4.59, according to Bove's research. The bank currently trades at 0.72 times book.

Assuming the same price-to-book ratio for Bank of America in 2015, Bove believes the bank's shares will be worth $99.37 in 2015, well over six times Monday's closing price of $15.40. Bank of America currently trades at 0.73 times book value.

While Citigroup and Bank of America are the biggest bargains among the largest banks, Bove sees only slightly smaller potential gains for JPMorgan Chase (JPM - Get Report). Even Wells Fargo (WFC - Get Report) shares, which Bove sees as expensive relative to the other three U.S. giants, will be worth $92.66 in 2015, according to Bove's formulation, more than three times its close of $28.71 on Monday.

Bank Stock Picks
Picking a Winner Among Tarp Holdouts

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BAC $15.56 -0.51%
C $52.80 -0.19%
JPM $62.34 -0.42%
MTB $118.37 -1.04%
PNC $90.82 -0.20%

Markets

DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs