This is not at all an expensive valuation metric for one of the world most unique and high growth technology stocks with an increasing focus on the next generation optical systems and data transmission future. It is axiomatic that bank shares do well during periods of Fed monetary easing. What is not axiomatic is the fact that nothing can mess up a bank's bottom line more than a economic recession and credit crunch. Hence I would avoid regional US bank stocks even now, despite their low multiples and a easy money Fed. I think Citicorp is cheap because the market simply has not priced in the value of its global franchise in diminishing earnings concentration risk.
Bankers talk wistfully about consistent earnings growth and asset diversification.
Well, Citi has gone ahead and created a global money machine based on these principles. Just took at the 4Q numbers. They met earnings growth and return on equity target of 20 per cent in a negative global financial milieu, Citicorp deserves to trade at a forward multiple of only 15. I believe its shares will head higher to 65-70 by year end 2001. It is clear that the technology shares rally that began with the Fed rate cut on January 3 is now in earnest.