Hi Paul,
You have ranked the banks 1-4, do u suggest CBA is a buy? And at what price?
A: Thanks for the question.
The purpose of ranking the banks (given that alone, the 4 MTBs make up 30% of the market by market capitalisation) is to provide guidance in these situations:
a) if you are underweight the sector, which one of 2 of the major banks might you invest in; and
b) if you are overweight the sector and thinking about scaling back your holdings, which banks might you retain/sell.
As I hope I made clear, I don’t think banks are a screaming buy at the moment. The best part of the run up is behind them – however, I don’t think there is any hurry to reduce weightings while cash rates stay where they are.
I am not normally a “ranking fan’, however Australian banking is an oligopolistic market and in many respects, there is not that much difference between the 4 MTBs.
I also think “targets” a bit meaningless for major stocks – because so much depends on the overall market strength and overall market PE. Analysts love them, and they may make sense for minor stocks.
I hope this gives you a little more context around my position.