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It's Time to Buy Citigroup Shares

NEW YORK (TheStreet) -- Citigroup's (C - Get Report) a buy ahead of earnings. Unless the bank totally blows it, the recent headline-induced sell-off will enable you to enter on the cheap.

Investors can profit if they catch a momentum stock early on but they have to be quick on their feet to exit or get steamrolled over. Tesla (TSLA) and Twitter (TWTR) are significant recent examples of such momentum stocks.

For long-term investors, a better method is to sit back, relax and wait for others to panic. Once a sufficient amount of blood is flowing, step up and calmly buy while others are pounding the sell button faster than Thumper after a second Grande at Starbucks (SBUX).

This year has been rough for Citigroup investors and shares are just above this year's lows. At near $47, the stock is down nearly 11% for the year to date.

The bank has several balls to juggle. The FBI and the Securities and Exchange Commission are investigating Banamex, the Mexican division. The Federal Reserve rejected Citigroup's proposed dividend increase, and everyone is stressed over the failing stress test.

Next week adds another source of fear because the bank reports earnings on April 14. The company is expected to report $1.16 per share, 7 cents less than the same period last year.

Analysts range from $1.01 to as high as $1.30. Citigroup beat the consensus estimate five out of the last eight quarters. But Citigroup doesn't need to beat estimates for investors to make money. After the above-mentioned headlines beat the shares into a pulp under $47, the sellers are running out of steam.

Short-sellers are hard to find. They're the smart money. If Citigroup's shares were vulnerable on a long-term basis, you can bet they would pounce on it in a heartbeat. Short interest is only 1.2% of the float, an incredibly small amount. Short interest alone should tell you the neon flashing sign "BUY NOW" is lit.

C PE Ratio (Forward) Chart

The bank's earnings are becoming increasingly cheap compared to its competitors. With a forward price-to-earnings ratio of 9.64, it's on sale compared to its peers. U.S. Bancorp (USB) and Wells Fargo (WFC), two banks I use and am highly bullish on, have price multiples over 35% higher than Citigroup. JPMorgan Chase (JPM) comes close, but Citigroup is the better value. The dangerous part of buying a falling knife for value comes from entering too early.

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