The shares of this bank holding company were recently upgraded to ‘Buy’ by Compass Point.
CIT Group (CIT)
From Cabot Undervalued Stocks Advisor
CIT Group (CIT) operates both a bank holding company and a financial holding company that provide financing, leasing and advisory services to small and middle market businesses, consumer markets, and the real estate and railroad industries.
CIT Group profits from rising asset yields vs. its low payout obligation on its rapidly increasing online money market deposits. New banking legislation in late May paves the way for a significant increase in M&A activity within the financial sector. CIT Group has become one of the top takeover targets cited in Wall Street research. The company repurchased $700 million of its stock during the first half of 2018 and intends to repurchase another $1 billion of stock in the next four quarters.
Consensus earnings estimates for CIT Group have increased throughout 2018. Analysts now expect earnings per share (EPS) to grow aggressively at 25.4% and 25.2% in 2018 and 2019. The corresponding P/Es are quite low at 13.0 and 10.4. There’s room for the 2019 P/E to rise to 13.2 (near its industry peer average) as investors see CIT achieve its stated financial goals, pushing the share price to about 64, and offering new investors a potential 27% profit.
CIT began the year by rising 13% to a new all-time high of 56 in March but has since traded between 49 and 56 amid sector weakness. I anticipate CIT surpassing 56 later this year and beginning a new run-up. Buy CIT now. Strong Buy.
Crista Huff, Cabot Undervalued Stocks Advisor, www.cabotwealth.com, 978-745-5532, July 2, 2018