2 stocks I like better than CBA for long-term growth

Let's see why these buy-rated shares could be better picks than Australia's largest bank.

| More on:
Happy shareholders clap and smile as they listen to a company earnings report.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Commonwealth Bank of Australia (CBA) appears overpriced compared to peers, and its growth outlook is limited.
  • One alternative pick, offering scalable growth through recurring revenues, is a medical imaging software provider with a strong sales pipeline and expanding market reach.
  • Another opportunity lies in an online furniture retailer that stands to benefit from increasing online penetration and diversifying its product offerings.

Commonwealth Bank of Australia (ASX: CBA) might be one of the most popular shares on the ASX, but popularity doesn't always make a stock a good buy.

At today's share price, CBA looks expensive by almost any measure, trading at a significant premium to its banking peers and well above its historical valuation range.

In addition, while it remains a high-quality business, its growth outlook appears subdued. With earnings largely tied to the domestic economy and interest rate movements, it is hard to see where the next big leg of expansion will come from.

For investors thinking long term, I believe there are better opportunities elsewhere, and in stocks with scalable business models, global ambitions, and structural tailwinds. Two that stand out to me are listed below.

Pro Medicus Ltd (ASX: PME)

Pro Medicus provides medical imaging software to hospitals and health networks across the United States, Europe, and Australia. Its flagship platform, Visage 7, allows doctors to view and analyse high-resolution medical images quickly and efficiently. This is a capability that has become critical in modern diagnostics.

A key attraction is its business model. It earns recurring revenue through long-term contracts with major healthcare systems, generating high margins, and strong cash flow with minimal capital requirements. Each new contract typically adds incremental profit, meaning growth can scale rapidly.

The good news is that its outlook is as positive as ever. With the global healthcare industry increasingly digitising and imaging volumes rising, the company's sales pipeline remains very strong according to management. It is also expanding into other ologies, giving it an even larger total addressable market. This is in contrast to CBA, which faces limited growth prospects in a mature banking sector.

Morgan Stanley is recommending Pro Medicus to clients. It has an overweight rating and $350.00 price target on its shares.

Temple & Webster Group Ltd (ASX: TPW)

Another ASX stock that could be better than CBA is Temple & Webster. It has become Australia's leading online furniture and homewares retailer.

Online penetration in Australia's furniture market is still relatively low compared to other developed economies. In fact, as of FY 2025, it had only captured 2.7% of the market. This gives Temple & Webster plenty of room to grow as consumers continue shifting their spending habits online. The company is also expanding its offering beyond home furniture, moving into home improvement to capture a larger slice of household spending.

Macquarie believes that this trend can continue. As a result, it recently put an outperform rating and $31.30 price target on its shares.

Motley Fool contributor James Mickleboro has positions in Pro Medicus and Temple & Webster Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Temple & Webster Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Pro Medicus and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

Ecstatic woman looking at her phone outside with her fist pumped.
Growth Shares

Here are the 3 Australian stocks I'd tell a new investor to buy asap

These shares could be top picks for new investors right now. Let's dig deeper into them.

Read more »

A businessman compares the growth trajectory of property versus shares.
Growth Shares

2 ASX giants to buy for decades of growth and dividends

Income or growth? Why not have both!

Read more »

A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.
Growth Shares

3 Australian shares to buy and hold for 20 more years

Let's see why these shares could be among the best to buy and hold until the 2040s.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Growth Shares

Top ASX shares to buy now for long-term growth

Let's see what makes these shares top long term picks for Aussie investors.

Read more »

Person pointing finger on on an increasing graph which represents a rising share price.
Growth Shares

2 ASX growth shares to buy now while they're on sale

These businesses are trading too cheaply, in my opinion.

Read more »

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.
Growth Shares

These ASX innovators could be the market's next big winners

Analysts think these exciting shares could be top buys.

Read more »

Green arrow with green stock prices symbolising a rising share price.
Growth Shares

These 2 ASX growth shares are ideal for Australians

I think these investments have a lot to offer investors.

Read more »

Green stock market graph with a rising arrow symbolising a rising share price.
Growth Shares

Experts rate these 2 ASX growth shares as buys for December!

Analysts are bullish about the prospects of these businesses.

Read more »