The rise of the Commonwealth Bank of Australia (ASX: CBA) shares over the past 12 months has been nothing short of extraordinary. As it currently stands, the CBA share price, despite having lost a nasty 3% during Friday's session, remains up by 27.7% since this time last year.
That's in addition to the bank hitting a series of new all-time highs in the past 12 months.
That 27.7% rise is not a typical gain that we usually see for an ASX 200 bank stock, despite CBA's enduring popularity.
While this rise has been great for anyone who owns CBA shares, as well as the S&P/ASX 200 Index (ASX: XJO), there's a good chance it has left many investors overexposed to the Commonwealth Bank share price.
Even if an investor doesn't own CBA shares directly, they probably own a fair chunk of this bank in their superannuation funds.
Building on that, if an investor owns an ASX index fund like the iShares Core S&P/ASX 200 ETF (ASX: IOZ), CBA is now a huge chunk of your investment. To illustrate, this bank takes up a whopping 9.53% of IOZ's portfolio right now, despite this ETF including 199 other underlying holdings.
Taking all of this into account, I think many ASX investors should consider diversifying away from CBA, and perhaps even the other major ASX bank stocks.
If you're one of those investors who may be overexposed to CBA shares, here are two alternatives I would go for today.
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Two ASX shares I would buy to diversify away from CBA
Woolworths Group Ltd (ASX: WOW)
First up is a company we'd all know in Woolworths.
In stark contrast to CBA, Woolworths shares are looking cheap to me right now. This supermarket giant has recovered substantially from the multi-year lows we saw back in May, but is still at a very low valuation relative to recent history.
Sure, the company has been losing some market share to Coles Group Ltd (ASX: COL). But Woolies remains the market leader in the Australian grocery sector, and by quite a large margin. This demonstrates to me that the company's brand remains strong, and arguably gives the company something of an economic moat.
It's not too often we see Woolworths shares with a dividend yield north of 3%. Yet that's exactly what has been on offer this week.
As such, I would much rather buy Woolies right now than CBA shares.
Wesfarmers Ltd (ASX: WES)
Next up, we have industrial and retail conglomerate Wesfarmers Ltd (ASX: WES). Wesfarmers may not be a household name across the country. But many brands in its huge collection of underlying businesses most certainly are. That would include Bunnings, OfficeWorks, Kmart and Target.
Wesfarmers also has stakes in chemical and fertiliser manufacturing, clothing, lithium and gas distribution companies, among others.
Wesfarmers shares don't come cheap. In fact, this ASX stock hit a new record high just this week. However, I would still buy Wesfarmers over CBA shares right now. For one, this is one of the highest quality companies on the market in my view.
Wesfarmers has a long history of delivering growth and dividend income. That can be attributed to its prudent management team, which tends to focus on amassing only the best companies under its umbrella.
Another reason I like this stock is its inherent diversity. Not too many other ASX 200 blue chips offer exposure to so many different corners of the economy in one place. Yet Wesfarmers does, and is one of this company's best aspects in my view.
If it's a choice between Wesfarmers shares and CBA shares right now, I would choose Wesfarmers every day of the week.
