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Commonwealth Bank of Australia screeches past $80 mark – but is it a buy?

Commonwealth Bank of Australia’s (ASX: CBA) miraculous recovery continued in fine form on Monday when the stock jumped 1.6%, representing a $1.25 gain and putting Australia’s largest bank back above the $80 mark.

Since dipping as low as $73.57 a fortnight ago, the stock has played a key role in driving the Australian stock market higher. Now trading at $80.02, CommBank has risen 8.8% while the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has jumped 6.4% in that time. Not bad for a market which so many investors presumed was destined for a major failure…

With Commonwealth Bank back on the winner’s list, investors are understandably wondering whether it will stay that way – whether more juice can be squeezed from Australia’s largest bank. Of course, it’s shown plenty of promise in the last couple of weeks, and it may just have another 4.9% left in it to surpass its previous all-time high near $84, which it set in July this year.

But investors shouldn’t get too carried away. While it is very possible that the bank’s shares could continue to rise in the near-term, they are very expensive and face a number of strong headwinds which could seriously stunt their earnings growth over the coming years.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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