3 Things Under the Radar This Week

Investing.com - Here are three things that flew under the radar this week.

1. BofA Hails Citi as ‘Pick of the Decade’

Bold calls in the world of investing can leave many with egg on their face. But Bank of America (NYSE:BAC) turned heads earlier this week when it hailed rival bank Citigroup (NYSE:C) as its "pick of the decade."

Bank of America is betting big that Citi's U.S. consumer business will start churning out the growth required to match that of its rivals in the coming year, boosting its stock valuation, which has traded at a discount for years.

Its consumer business has lagged behind rivals in terms of profitability and share of deposits. But that weakness has been much of its own doing as Citi was the one big bank not expand its deposit rates during the financial crisis.

The bank has since plotted a course to turn around its U.S. consumer business.

In August 2018, it announced a string of changes at the top within its global consumer banking division and moved to a regional model, replicating a formula that worked well in its businesses in Asia and Mexico.

In the ensuing months, further management changes followed, and the bank streamlined its businesses, overhauling its investment and stock trading operations.

The bank has also zoned in on its U.S. credit card business, which accounts for the bulk of its global consumer banking revenue, to grow deposits by promoting its checking and savings accounts to card holders.

These "sweeping management changes" combined with continued efficiency initiatives will drive consistent improvement in return on equity, and end the stock's longtime valuation discount, BofA said.

The bold claim is not without merit.

Citi reported higher-than-expected earnings in the third quarter, with a return on tangible common equity – a key measure of profit – of 12.2%, above the goal of 12%.

The earnings beat was led by its global consumer business as north American consumer deposits grew 5% from a year earlier, nearly 2% faster than consumer deposits at Bank of America and JPMorgan Chase.

With Citi's fourth-quarter results due as soon as next week, BofA need not wait long for further signs that its pick of the decade is headed in the right direction.

2. Tesla Market Cap Tops GM, Ford (Briefly)

Tesla (NASDAQ:TSLA) did something impressive this week that may or may not have been overshadowed by CEO Elon Musk dancing up a storm at a presentation in China Tuesday (depending on your social media feeds).

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Construction and manufacturing both saw average hourly earnings rise in December from November, while financial activities saw a dip.