It's been a strong start to the trading week for the S&P/ASX 200 Index (ASX: XJO) this Monday. At the time of writing, the ASX 200 has climbed by a healthy 0.43% this session, pulling the index up to around 8,135 points. That's just a whisker away from the market's all-time high of 8,148.7 points. But let's talk about Commonwealth Bank of Australia (ASX: CBA) shares.
As one would expect, CBA is also having a happy start to the week. This ASX 200 bank stock has jumped a joyous 0.8% so far this Monday and is now sitting at $142.79 a share. That is also just a tad off the banking giant's all-time high of $145.24
This rise continues the strong momentum we have seen with CBA in recent months. The bank is now up a hefty 25.7% over 2024 to date, as well as up more than 39% over the past 12 months alone. That's pretty impressive considering CBA is the ASX's largest stock, with a current market capitalisation of just under $240 billion.
CBA shares are one of the most widely held investments on the ASX. Many investors have owned this bank for years, if not decades. And almost all of its investors have done remarkably well out of this decision, despite analysts and brokers labelling the bank 'overvalued' for quite a long time now.
But just because a stock has done well in the past doesn't guarantee it will continue to do well going forward. So today, let's discuss whether you'd be crazy to buy CBA shares at the current share price of around $143.
Would you be crazy to buy CBA shares today?
Unfortunately for CBA bulls, most experts reckon you would be.
Last week, my Fool colleague James covered the views of ASX broker Goldman Sachs. Goldman took another look at CBA recently, and concluded that less than a third of CBA's share price rises over the past year have actually been driven by improvements in the bank's business fundamentals. The rest has been driven by what Goldman sees as misguided optimism in CBA's future returns.
As such, the broker did increase its 12-month share price target for CBA, but only to $100.35 a share. As such, Goldman retained its sell rating on CBA shares, estimating that investors could see their stake in Commonwealth Bank fall by more than 30% over the coming 12 months. The broker also reckons CBA shares will "underperform peers [in the banking sector] by 10% over the next 12 months."
Goldman isn't the only expert to describe CBA shares as a sell this month though.
As reported in the Australian Financial Review last week, managers at listed investment company (LIC) WAM Leaders Ltd (ASX: WLE) are also steering clear of CBA.
Buy miners and sell banks?
WAM Leaders has suffered a nasty share price pullback in the past 12 months. Since September 2023, its shares have underperformed the ASX 200 by more than 25%.
Even so, portfolio managers Matthew Haupt and John Ayoub reckon that many ASX 200 shares, including the banks, have lofty valuations that don't justify their underlying fundamentals right now. They are anticipating a market "inflection point" in the near future. This would reportedly see "a rapid transition out of the banking sector and into the beaten-down mining giants".
"The easy trade has been sell resources and buy banks, but when that unwinds, there's going to be a rapid snapback," Mr Ayoub was quoted as stating. "So we need to get ahead of that and start building positions, which we're doing now".
So, it seems that ASX experts remain fairly united in their view of CBA shares as overvalued. Saying that, these experts have been saying this for a while now. And yet CBA has done nothing but hit new highs regardless. Only time will tell if they are finally on the money today.
