At what price will buy Citi and BAC next time?

ChaosNantuko answered 6 months ago …

I honestly don't think its gonna happen. I think they'll definitely come down from current levels, but i think C at 1.50, and BAC at 4.00 would be my long term buy points.
A better strategy may be to wait for them to appreciate at least 30%. eg: if C goes to a low of 1, then appreciates by 30% to 1.30, then buy. If BAC goes down to 3, then moves up to 3.90 buy. You miss the beginning of the move, but your less likely to buy, have the stock price get chopped in half, and get stopped out of your position.
Looking at a company like C, you have to say, "what do i expect from them in the future"?
The big questions are...
1) Will they be around after the recession?
2) Will they be as profitable after the recession as they were before?
3) If not, what percentage of their pre-recession profits will they be able to pull off? 50%? 20%?
In the case that they only make 20% in EPS compared to before, then that's still $0.86 EPS annually. With a PE of 8, that puts it above $6 per share.
So the risk is that they go bankrupt before returning to profitability.
In all honesty, i think financial stocks are undervalued at the moment, in terms of their long term profitability. That being said, i also believe they're short term overbought, and so I'd be shorting them and not buying them at the moment because that's the time frame i trade. 3 years down the road though, i think most of the heavily beat down financial stocks will be trading at at least double todays values.