In morning trade on Tuesday, BHP Group Ltd (ASX: BHP) shares are trading for $60.95 each, while the Commonwealth Bank of Australia (ASX: CBA) share price stands at $153.56.
As it stands then, CommBank shares have a 151.9% higher valuation than BHP shares.
Although with a market cap of approximately $310.2 billion, BHP has taken a commanding lead as the biggest company on the ASX. With a market cap of $256.9 billion, CBA comes in at number two.
BHP retook that title from the S&P/ASX 200 Index (ASX: XJO) bank stock on 27 January this year after CBA had held the biggest ASX share crown for almost 18 months. As you may recall, the following few weeks saw the two ASX titans hand that crown back and forth as one stock alternately outperformed the other.
But by April the winds had turned decidedly in BHP's favour, with iron ore prices remaining copper prices racing to new record highs.
At the same time, the CBA share price began to come under pressure as investors eyed a potentially deteriorating Aussie economy. With ongoing elevated inflation and higher interest rates, the bank could be facing lower home loans coupled with higher default rates.
With this picture in mind, and their outlook on copper, the team at Regal Partners believe that not only is BHP likely to maintain a larger market cap than CBA, but that both stocks could be trading at a similar price within five years.
"Phil King and I have often discussed the scenario over the next five years where CBA and BHP are both trading at $100," Regal Partners investment director Charlie Aitken said (quoted by The Australian Financial Review).
"We've generally kept that view to ourselves because it once sounded so outrageous. Today, it doesn't sound so far-fetched," he added.
Pointing to the recent stresses emerging in the private Aussie credit market, Aitken noted, "I would be astonished if arrears, bad and doubtful debts and credit card delinquencies aren't all increasing sharply for … banks."
Regal's five-year forecast would see the CBA share price fall by almost 35% from current levels, putting it back to November 2023 prices. While Regal expects that BHP's copper exposure will see the 'undervalued' miner outperform over this time amid demand for the red metal, spurred in part by the AI revolution.
Where we prefer to invest is where productivity gains from developments in AI and an associated lift in demand for the given product driven by AI: welcome to mining. The modern world can't open for business each day without BHP's mined products, yet, unlike Jensen Huang, 99.99 per cent of the world wouldn't recognise BHP chief executive Brandon Craig if they walked past him in the street.