Why Leon Cooperman Is Optimistic about Citigroup

Leon Cooperman is optimistic about both the financial sector (XLF) and the technology sector (XLK). According to a 13F filing report, these two sectors represented nearly 13.7% and 27.2%, respectively, of the Omega Advisors’ portfolio as of June 30, 2017.

Cooperman believes the Fed will raise rates in the future, which could benefit financial stocks (VFH), as it would increase their profit margin. He said, “we own some Wells Fargo (WFC). We own some Citi (C). Interest rates are below where they ought to be. I expect interest rates to rise.”

On November 2, 2017, Citigroup (C) was trading at $74.74. Its 52-week high is $76.14 and 52-week low is $47.70. On a year-to-date basis, the stock has returned nearly 23.4%. Over the last one year, the stock returned nearly 55%. The stock is presently trading at a trailing price-to-earnings ratio of 14.3x and a 12-month forward price-to-earnings multiple of 12.9x.

The banking industry (KBE) is trading at a trailing price-to-earnings ratio of 17.3x, the financial sector is at 23.5x, and the S&P 500 Index (SPY) is at 26.4x. Citigroup’s one-year EPS (earnings per share) growth rate is 10.6%, while the financial sector is at 15.5%.

In the next part of this series, we’ll analyze Leon Cooperman’s view on Wells Fargo (WFC).