We recently published a list of 12 Most Undervalued Large Cap Stocks to Buy Now. In this article, we are going to take a look at where $Citigroup Inc(C-N)$. (NYSE:C) stands against other most undervalued large cap stocks to buy now.

On March 4, David Katz, Chief Investment Officer at Matrix Asset Advisors, joined ‘The Exchange’ on CNBC to share his perspective on the current state of the bull market and what February’s mixed action and sector rotation might signal for the rest of the year. Katz acknowledged that while people might not want to hear it, the volatility seen in February is likely to persist throughout the year, with both upside and downside movements. He emphasized that this creates opportunities for investors but also necessitates caution. Katz highlighted several positive factors supporting the market, which included a strong economy and solid corporate performance. However, he expressed concerns about certain policies from the administration, such as tariffs, immigration, and the relationship with the Fed. While these issues have been largely ignored by the market so far, Katz warned that they could eventually lead to a 3-5% correction. Despite this, he remained optimistic about the economy’s ability to navigate these challenges and recommended buying into market dips rather than chasing rallies.

To support his sentiment, Katz pointed to companies that have already experienced significant corrections and are positioned to perform well regardless of broader market movements. He highlighted their strong fundamentals, attractive valuations (most trading at under 13-14 times earnings), and good outlooks. He also noted that last year’s market leaders have slowed significantly, while sectors that underperformed are beginning to show meaningful improvement, a trend he expects to continue. This sector rotation suggests that investors should be prepared to adapt their strategies as different sectors gain momentum throughout the year.

Methodology

We used the Finviz stock screener to compile a list of the top stocks trading between $10 billion and $200 billion. We then selected stocks with a forward P/E ratio under 15 and made a list of 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A team of financial advisors huddled around a desk, discussing the best investment strategy for their client.

Citigroup Inc. (NYSE:C)

Forward Price-to-Earnings Ratio as of March 4: 10.59

Number of Hedge Fund Holders: 101

Citigroup Inc. (NYSE:C) is a global financial services holding company that offers an array of products and services to a diverse clientele. Operating through five segments, it provides services that range from treasury and trade solutions and securities services to markets, banking, US personal banking, and wealth management. It serves consumers, corporations, governments, and institutions.

Its Services division is a major contributor to the company’s revenue. In 2024, this division generated $19.6 billion in revenue, which was a 9% increase from the previous year. In Q4 alone, the revenue jumped by 15%. This growth came from the strong performance in both Treasury and Trade Solutions (TTS) and Security Services. A part of the division’s success comes from its fee-based revenue.

This growth is attributed to higher activity in areas like US dollar clearing, commercial card spending, and cross-border transactions. Citigroup Inc. (NYSE:C) has been gaining market share in both TTS and Security Services. It has expanded its client base among large institutions and commercial clients through strategic digital investments and enhanced client service offerings. This has solidified its position as a leading global financial services provider.

Earlier last year, here is what Diamond Hill Capital Long-Short Fund said about Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:

“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”

Overall, C ranks 1st on our list of most undervalued large cap stocks to buy now. While we acknowledge the growth potential of C as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than C but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.