5 Reasons to Buy Citigroup Now

NEW YORK (TheStreet) -- For long-term investors, Citigroup (C) remains a beautiful play.

Of course, a lot depends on how you define "long-term." With the media space dominated by screaming daily headlines and a focus on quarterly results, a securities industry focused on profitable day trading and analysts setting 12-month price targets, it's easy to forget that you might need to hold a long-term position for several years to make a solid gain.

Citigroup CEO Vikram S. Pandit

Investors are bound to be frustrated by the 35% drop in Citigroup's share price since the shares underwent a 1-for-10 reverse split on May 6. The KBW Bank Index (I:BKX) declined 23% over the same period.

Analysts have been cutting their earnings and revenue estimates for the largest U.S. banks, projecting sharp declines in third-quarter trading and capital markets revenue, along with lower fee income as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

But Citigroup is a much less risky play than the similarly valued Bank of America (BAC), which is facing an uncertain ride through the remaining mortgage mess.

Right now you're looking at a golden opportunity to start a position in Citigroup's shares on the cheap, or add to a long-term position. The shares have been thrown out with the bathwater, as you'll see below.

Here are 5 reasons to buy Citi now:

5. The shares have been thrown out with the bathwater.

The shares trade for six times the consensus 2012 EPS estimate of $4.63, and for just over half the company's June 30 tangible book value of $49.64, according to SNL Financial.

This is a similar valuation to Bank of America, which faces mortgage putback risks that several analysts have said are impossible to quantify at this point, mainly resulting from its disastrous acquisition of Countrywide in 2008. Citigroup faces much lower mortgage repurchase demands from investors in mortgage-backed securities than the remaining "big four" U.S. banks, as highlighted by June 30 data from Federal Reserve filings, supplied by SNL Financial.

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