One of the best-performing groups of shares in the last three months has been the banks. During that time the big four have each gained an average of 11%, compared to a 5% gain from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
I wasn't too surprised by this rally, as I felt the big four and Westpac Banking Corp (ASX: WBC) in particular were in bargain territory last year.
But is it still the case today?
Even though Westpac's shares tumbled around 2% last week, I still wouldn't class them as being in the buy zone.
With its shares changing hands at 14x trailing earnings and 1.9x book value, I believe Westpac's shares are fully valued now. Because of this I think there is very little by way of upside potential for them.
Although the bank is likely to receive a boost from its out of cycle rate rises, I don't believe it will be enough to justify buying in at the current price.
Instead I would sit back and hope that a Trump-related sell-off brings its share price down to around the $30 mark. At that price I see its shares providing investors with scope for gains on top of its generous dividend.
Of the big four banks I would say that National Australia Bank Ltd. (ASX: NAB) is the only bank I would be tempted into buying at current prices.
Its shares can be picked up at 13x trailing earnings and 1.6x book value, which is a significant discount to both Westpac and Commonwealth Bank of Australia (ASX: CBA).