Commonwealth Bank of Australia (ASX: CBA) shares have enjoyed a stellar run over the past year.
Currently changing hands for $155.73 apiece, shares in the S&P/ASX 200 Index (ASX: XJO) bank stock are up 31.7% over the past 12 months.
That's more than six times the 4.8% one-year returns posted by the ASX 200.
And we haven't added in the CBA dividends yet.
Over the year, CBA paid out (or shortly will pay out) a total of $4.75 a share in fully franked dividends. Adding that back in, and CBA shares have gained an accumulated 35.6% since this time last year.
Take that, inflation!
While long-term investors have clearly done quite well from their CommBank stock holdings – shares are up 111% over five years – the big run higher this last year sees CBA trading at a price-to-earnings (P/E) ratio of around 27 times. That's higher than any of the other ASX 200 bank stocks.
And that "significant premium" is a red flag for Alto Capital's Tony Locantro (courtesy of The Bull).
Time to take profit on CBA shares?
"The bank delivered a strong half year result in fiscal year 2025," said Locantro, who has a sell recommendation on CBA shares.
"Statutory net profit after tax of $5.142 billion was up 6% on the prior corresponding period. The fully franked interim dividend of $2.25 a share was up 5%," he noted.
Locantro added:
The share price performance of CBA relative to the banking and financial sector has been strong, with the stock trading at a significant premium to its peers.
The shares have risen from $117.36 on March 1, 2024, to trade at $155.81 on February 27, 2025.
With that surging share price in mind, Locantro concluded, "Investors may want to consider taking some profits in what we consider a high share price."
Short positions dwindling
If CBA shares were to keep gaining 32% a year, it would see the share price of Australia's biggest bank double every two years and three months.
Those kinds of ongoing, outsized gains are unlikely to be sustainable.
But then, CBA has long defied a raft of bearish analyst expectations, and there has been no shortage of short sellers aiming to profit from a decline in the CommBank share price.
However, short sellers seem wearied of this bet. Short positions in CBA are on the decline, recently falling to two-year lows.
Ten Cap founder Jun Bei Liu remains bullish on CBA, labelling it the "best quality bank".
According to Liu (quoted by The Australian Financial Review):
It may be one of the most expensive banks in the world. But the thing is, earnings are stable. That would have made short sellers nervous…
"When short sellers see an enormous amount of buying support for the bank [from super funds], it's very hard for them to consistently keep shorting because there's too much risk.
