In a new Motley Fool series, we pit two stocks against each other on five criteria to determine the better buy.
Today's matchup features two companies that have been multibaggers since being left for dead back in March.
It's the down-on-its-luck casino giant, MGM Mirage
Using five short-of-scientific-but-carefully chosen criteria, let's determine which is the better buy:
Round 1: Balance sheet
MGM is absolutely flooded with debt, but it gets the nod over Citigroup because of clarity. I defy you to read through Citi's financial statements and get any reasonable handle on its portfolio of loans and derivatives. Note that the same could be said for Wells Fargo
Round 2: Operations
Operations is a tough call. Like many of the casino companies (See Las Vegas Sands
Round 3: Safer bet
In other words, which company will put you in a better position to "never lose money" (as super-investor Warren Buffett says)? If you haven't gathered yet, both stocks are risky propositions (especially after their run-ups), but the nod goes to Citigroup because of its "too big to fail" status.
Round 4: Sexier bet
On the flip side of safe is sexy, the upside growth potential. Both companies are already quite large, but MGM continues to try to get bigger while Citi is trying to get smaller. This time Vegas is sexier than Wall Street.
Round 5: CAPS rating
Both Citigroup and MGM rate two stars (out of a possible five) in Motley Fool CAPS. Hence, our community isn't very bullish on either stock's chances of beating the S&P 500 from here. Looking at the raw CAPS data, though, they're liking Citi just a smidge more.
The blow-by-blow recap
Factor |
MGM Mirage |
Citigroup |
---|---|---|
Balance Sheet |
X |
|
Operations |
X |
|
Safer Bet |
|
X |
Sexier Bet |
X |
|
CAPS Rating |
|
X |
There you have it. MGM beats Citigroup 3-2, making it our better buy. But what do you think? Vote in the poll below. Then share your thoughts in the comments section below the poll.