When it comes to ASX heavyweights, Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) shares are at the top of the pack.
But over the past five years, the scoreboard is clear: CBA shares have crushed BHP shares, delivering a staggering 177% return, compared to just 25% for BHP. Both exclude dividends.
But the big question for investors is: can this outperformance continue over the next five years? Or is it time for BHP to take the lead?
CBA shares
CBA has been the standout performer among Australia's big banks, buoyed by strong earnings, a sticky customer base, and market-leading returns on equity. However, there's no getting around the fact that CBA shares are looking expensive.
A quick look at broker recommendations paints a clear picture. Analysts at Citi, Macquarie, Morgans, UBS, Morgan Stanley, and Ord Minnett all have the equivalent of sell ratings on its shares.
And with price targets ranging from $97.49 to $128.00, there's potential downside of up to 44% from current levels.
It is worth noting these are 12-month price targets, not five-year forecasts. But starting from a valuation that's widely seen as overstretched makes it tough for CBA to deliver the same level of outperformance moving forward. That's unless its earnings growth surprises to the upside.
BHP shares
BHP hasn't exactly set the investment world on fire in recent years — but that could be changing.
Several leading brokers, including Morgans, Macquarie, Citi, and Ord Minnett, see the stock as undervalued with price targets suggesting that upside of up to 28% is possible over the next year.
BHP's big bet on copper is a key part of the story. If the global push toward electrification continues — and copper demand remains strong — BHP could be a major beneficiary.
However, much of this will depend on the commodity cycle. If iron ore and copper prices hold up, BHP's earnings could rebound strongly and drive its shares higher. If not, it could be another tough run.
So, who's the winner over the next five years?
Trying to predict which of these ASX 200 heavyweights will outperform over a five-year period is no easy task.
CBA shares' past performance has been exceptional, but the bank's lofty valuation leaves little margin for error.
BHP, by contrast, looks cheaper and better supported by broker recommendations — but its fate is more tied to commodity prices and global economic trends.
Starting from an undervalued position arguably gives BHP the edge, especially if the mining cycle turns favourable and its copper strategy pays off. But it is a higher-risk bet, and the path forward will likely be bumpier than CBA's more stable, income-focused model.
Time will ultimately tell, but I wouldn't be surprised if BHP is the winner over the next five years.
