It's been a little over a year and three months now since the rapid rise of Commonwealth Bank of Australia (ASX: CBA) shares saw the S&P/ASX 200 Index (ASX: XJO) bank stock surpass BHP Group Ltd (ASX: BHP) as the biggest company on the ASX.
But as CBA stock continues to struggle amid the strong rebound in BHP shares, the months, or even weeks, ahead could see Australia's biggest mining company retake the crown as the biggest ASX stock.
At the time of writing, CBA shares are putting up a good fight, up 1% at $155.58 each.
But CommBank stock is still losing ground to BHP today, with BHP shares up 2.6% at this same time, trading for $47.71 apiece.
This sees BHP commanding a market cap of $242.4 billion, closing in on CBA's $259.2 billion valuation.
What's been happening with BHP and CBA shares?
BHP shares hit a one-year low of $34.16 on 9 April amid global concerns over US President Donald Trump's tariff campaign.
But amid a stellar rally in copper prices to record highs of US$13,000 per tonne, and with iron ore prices holding above US$100 per tonne (currently at US$109 per tonne), investors have been piling back into the ASX 200 mining giant.
Iron ore remains BHP's top revenue earner, with copper coming in at number two. And the commodity rally has sent the BHP share price up 39.7% since 9 April's close.
CBA shares also got walloped in April but then surged to all-time highs of $191.40 on 25 June.
Shares in Australia's biggest bank (and still the biggest stock on the ASX) have fallen 18.7% since that high-water mark. The selling pressure has come amid growing concerns that CommBank's rapid rise left it materially overvalued compared to its peers. Even after the past months' share price retrace, CBA still trades on a price-to-earnings (P/E) ratio of around 25 times.
What are the experts saying?
Commenting on the shifting dynamics between BHP and CBA shares in recent months, Sean Sequeira, CFO of Australian Eagle Asset Management, said (quoted by The Australian Financial Review):
It's the realisation that CBA had a valuation which was one of the highest in the world for a bank that resulted in the shares being sold down. At the same time, BHP is being supported by strong commodity prices and a strong outlook.
And looking ahead, Plato Investment Management portfolio manager Peter Gardner wouldn't be surprised to see BHP retake the crown of the biggest share on the ASX.
"It is still a little overvalued," he said of CommBank stock, adding that a more reasonable level for CBA shares would be in the range of $130 to $140 each.
According to Gardner:
I would not be surprised if BHP continued to run further, given what's happening globally and with commodity prices rallying further. The commodity price often runs a lot further than people expect, just because it might take a while to get mines started up.
