Commonwealth Bank of Australia (ASX: CBA) has surged to its highest price in nearly two months today with the shares adding 1.9% to trade at $87.65, compared to a remarkable 1.7% gain for the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
It seems that the market's bulls are back in full flight following a brief, but violent, scare regarding Greece's default. Although it is still unclear whether or not the country will leave the Eurozone, investors are paying less attention to the potential consequences and focusing more on the bargains being presented by the market.
It should be noted that I do not believe Commonwealth Bank, or any of its rivals, present as bargains right now, despite the fact that they each remain well below their respective highs. However, many investors remain attracted to the banks due to their perceived level of 'security', together with their solid fully franked dividends in an otherwise low interest rate environment.
At $87.65, Commonwealth Bank trades on a ratio of 15.7x forecast earnings with a price/book ratio of 2.9x – both of which are well above the bank's historical averages. Although the bank could appreciate further in price in the near term, I would suggest that now is the wrong time of the cycle to buy and that investors should focus on other high-yield opportunities.