Thanks to a solid gain yesterday, the Australia and New Zealand Banking Group (ASX: ANZ) share price has just hit a new 52-week high of $32.44.
This latest gain means the bank's shares have now rallied over 33% in the last 12 months.
This smashes both the rest of the big four and the impressive 12.9% gain by the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
Is it too late to invest?
I think it is. As I said with Westpac Banking Corp (ASX: WBC) recently, at their current share prices I believe the banks carry reasonably significant downside risk.
Over the last 10 years ANZ's shares have had a tendency to trade on an average price-to-earnings multiple of 12.3x.
At present the bank's shares are changing hands at over 16x trailing earnings or around 14x estimated FY 2017 earnings according to CommSec.
Considering many believe that we are at a cyclical low for bad debt and that the housing market has peaked, I see little attraction in paying over the odds to own bank shares right now.
In my opinion a fair share price for ANZ to trade at would be around $28.50. This is around 12x forward earnings and roughly 12% lower than the current share price.
At this level I think it would offer a solid risk/reward for investors, as well as an attractive dividend yield.
But until its shares fall to that level I'm going to give the bank a miss and focus on other areas of the market. For example, at present I believe there are great opportunities to be found in the information technology and telecommunications sectors.
