Forget CBA shares and buy these ASX 200 stocks in May

Analysts think these stocks could be in the buy zone instead of Australia's largest bank.

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Commonwealth Bank of Australia (ASX: CBA) is one of the highest-quality companies in Australia.

However, with most analysts saying that its shares are significantly overvalued, now may not be the best time to invest in the banking giant.

So, which ASX 200 stocks could be good alternatives to CBA shares? Let's take a look at three candidates:

Endeavour Group Ltd (ASX: EDV)

The first ASX 200 stock for investors to look at is Endeavour. It is a drinks giant operating an omnichannel network of more than 1,675 retail stores and 344 hotels. The former includes the BWS and Dan Murphy's brands.

Goldman Sachs is a big fan of the company. This is due partly to its "clear market leading position" thanks to its 40% market share in a defensive alcohol retail market. In addition, it feels that its shares are attractively priced at current levels.

Much like CBA shares, Endeavour provides investors with a decent dividend yield. Goldman expects fully franked dividends of approximately 22 cents per share in FY 2024 and FY 2025. Based on the current Endeavour share price of $5.33, this will mean yields of 4.1% for both years.

The broker has a buy rating and a $6.20 price target on the company's shares.

IPH Ltd (ASX: IPH)

Another ASX 200 stock that could be a good alternative to CBA shares is IPH. It is an intellectual property solutions firm that offers a wide range of services for the protection, commercialisation, enforcement, and management of intellectual property.

This is another defensive business that Goldman Sachs likes. In fact, the broker believes IPH is "well-placed to deliver consistent and defensive earnings with modest overall organic growth."

Goldman expects this to provide investors with dividend yields that are much larger than those offered by Australia's largest bank. The broker is forecasting fully franked dividends of 34 cents per share in FY 2024 and then 37 cents per share in FY 2025. Based on the current IPH share price of $6.10, this represents yields of 5.6% and 6.1%, respectively.

But perhaps the best thing about its shares is the fact that Goldman believes they could rise materially from current levels. It has a buy rating and an $8.70 price target on them, which implies a potential upside of approximately 43%.

Telstra Group Ltd (ASX: TLS)

A third ASX 200 stock that could be a good alternative for investors is Telstra.

It shouldn't require any introduction. But if you're not familiar, it is Australia's largest telecommunications company with millions of broadband and mobile subscribers.

Bell Potter is a fan of Telstra and believes its shares are trading at a good level for investors. It notes that Telstra "is starting to look reasonable value trading on an FY25 PE ratio of <20x while the average of other reasonable comps in the S&P/ASX 20 is now c.23x." It is also worth noting that its shares have fallen further since it wrote that.

As with the others, the broker is expecting some good dividend yields from its shares. It is forecasting fully franked dividends of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025. Based on the current Telstra share price of $3.64, this equates to fully franked yields of 5% and 5.2%, respectively.

Bell Potter has a buy rating and a $4.25 price target on Telstra's shares.

Motley Fool contributor James Mickleboro has positions in Endeavour Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended IPH. 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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