Is the ANZ share price in the buy zone?

The Australia and New Zealand Banking Group (ASX: ANZ) share price has been a stronger performer in 2019.

Since the turn of the year the banking giant’s shares have rallied almost 14% higher.

Is it too late to buy ANZ shares?

I don’t think it too late to buy ANZ shares. Although it is no longer the absolute bargain that it was on December 31, I still see significant value in its shares at the current level.

Especially with them trading on lower than average multiples and offering a trailing fully franked 5.7% dividend.

I’m not alone in believing that its shares still offer compelling value to investors. A note out of Goldman Sachs earlier this month reveals that its analysts have a conviction buy rating and $29.42 price target on its shares.

This price target implies potential upside of 5.5% over the next 12 months excluding dividends. If you include its dividend this return stretches to over 11%.

ANZ is the broker’s preferred major bank exposure due to its “view that it is best positioned of the major banks to face into the sector’s slowing revenue environment.”

This includes its overweight exposure to business lending, further absolute cost reduction opportunities, and lower bad and doubtful debt charges over the cycle due to the structural shift in the portfolio.

In addition to this, following its most recent Pillar 3 update, the broker notes that ANZ’s CET1 ratio of 11.3% remains well above its peers and APRA’s 10.5% target.

Furthermore, when adjusting for announced asset sales yet to settle and its share buy back, this CET1 ratio would rise to 11.6%. The broker points out that this implies $4.3 billion of surplus capital above APRA’s unquestionably strong level of 10.5%.

Goldman believes that this makes further capital management from ANZ quite likely.

Should you invest?

Overall, if you don’t have meaningful exposure to the banks then I would suggest you consider ANZ right now. It is my preferred pick ahead of National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

But if you're not keen on bank shares then check out these highly rated dividend shares.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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