Caller: Hey, I’m interested in buying a stock, Citigroup, and I would like to know would it be a good stock? I’m 28 years old, and I want to know it Citi a good long-term and short-term investment?

Cramer: And what was the stock? Did we get the stock’s name? Citigroup. Your age is right. You know why? Because I’m using a $12 price target in the year 2012 for now, remember, we’ve got to get the government selling its share. They own 34% of it. That’s been a huge overhang. I am a big believer in Vikram he’s spinning off the Primerica. I think ultimately he’s going to bring up value, $5.60 is the book value. I think it should trade to that. Ultimately book value builds. I think you’ve got a great stock to own.

Is it as good as Bank of America if they pick Moynihan. Is it as good as Wells Fargo? That’s another one I own for my Charitable Trust, it’s not as well run. But Citigroup makes sense for any 28-year-old who’s watching this show.” — CNBC’s Mad Money 11/10/2009

On Tuesday’s Mad Money, Cramer fielded this call from a young investor curious about Citigroup (C) stock.  Cramer’s advised that for a long term investor Citi is a justifiable stock, and in particular because young investors normally have the time and ability to take on a little more risk.  While we do not see Citi’s valuation as particularly attractive as of yet, that is largely because our methodology is normally pretty risk averse.  When a company has been through so many write-downs and earnings have been decimated to the extent that Citi’s have, it is unlikely that our methodology will look favorably on the stock.C

Cramer sees Citigroup trading up to its book value which he states at $5.60 at this point, but according to the latest data from Morningstar (MORN) the book value per share is somewhere closer to $3.41.  If Cramer believes that the stock should trade at only book value, it does make a big difference in whose data you trust.  This is not to say that he is incorrect in his assertion that book value should continue to build over the next few years assuming economic conditions continue to improve.  Citi has some very valuable and diverse assets that will only gain in their appeal as global growth reemerges.

As we mentioned earlier, we have an Overvalued stance on Citi at the current price, simply because the fundamentals have dropped so rapidly from their levels of just two years ago.  With that in mind, the company has already begun the long road back from the abyss and at least earnings are becoming much less negative in recent quarters and have surprised analysts to the upside the last three quarters.  So, even though this stock is not in our wheelhouse according to our value investing methodology because of the risk factor from the last few years, if you have time and an appropriate appetite for risk there is a reasonable case to be made that this stock doubles in the next few years.

Driving Youthful Investors Towards Citigroup