MENU

Falling bank prices are good for investors

This morning BBY, Australia’s biggest non-bank owned stockbroker, has upgraded all of our big banks to a BUY rating.

The stockbroker has given each bank target prices significantly below what they previously set. Westpac (ASX: WBC), which has fallen significantly over the past two months has been given a target price of $28.50, which is only nine cents above its current price.

ANZ’s (ASX: ANZ) target price was cut 14% to $28.50, a figure that represents a 1% rise on current prices. NAB’s (ASX: NAB) target price was cut 12% to $30, which is very likely given the company’s higher than usual dividend.

Commonwealth Bank (ASX: CBA) is tipped to reach $70 per share but currently trades at $67.63. However, it already has a P/E of 14 which (since it doesn’t have much growth prospects) indicates that investors are buying the share for security and income which, as we know, becomes less appealing the higher the share price gets.

No one can predict short-term share prices with certainty, but finding good business models and strong management will set you up for long-term gain. Banking stocks are great safety and income plays but the biggest risk to investors is inflated share prices. It’s important to buy at the lowest price possible, where the dividends are highest and the company has less risk of being overvalued.

In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Owen Raskiewicz owns shares of ANZ.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.