Dear readers, the Straits Times Index is now over the 2,700 mark. DBS stock, OCBC stock and UOB stock have also rallied along with the Straits Times Index (STI) so much so that each of these banking stocks is now retesting their previous highs.
For investors looking into investing into the three banking stocks, which of this trio stocks is the most attractive now?
One such metric is to look at whether the stock is undervalued. A stock which is undervalued does seem to be of some value to investors as they pay for less than the book value of the stock. Among the three banking stocks, DBS is not undervalued as its Price-to-Book ratio is 1.171. On the converse, both OCBC and UOB stocks are still undervalued with each having a Price-to-Book ratio of 0.901 and 0.918.
Next, we look at between OCBC stock and UOB stock in terms of Price-to-Earnings (P/E) ratio. The P/E ratio of OCBC stock and UOB stock are respectively 11.31 and 10.289. It seems that UOB stock is slightly cheaper than OCBC in this aspect. However, between the two, OCBC does offer a slightly better dividend yield at 4.484% than UOB’s yield of 4.265%. Assuming both OCBC and UOB stocks are fully valued at P/B ratio of 1, the normalised divided end of OCBC and UOB stock is respectively 4.98% and 4.65% so OCBC stock is a better candidate for interested investors in terms of dividend yields and price-to-book values.
But be it OCBC or UOB stocks, both stocks are now overbought. After the recent rallies, I believe it is time that these two banking stocks go back to more humble levels through a correction soon.
That’s it for my insights today. I Thank you once again for your support of SG STOCKS INVESTING, your Money and Lifestyle magazine! Connect with me here to follow the daily exciting and useful posts on these two blogs, Thank You for your support!
BINGE READ ALL POSTS!
Visit Home Page for more reads or Connect here!