Part of the fun of investing in ASX shares is finding yourself winners. If those winners keep on winning, then you've done especially well. But part of the fun is investing knowing you could be wrong. It's not much fun winning a game if your victory is pre-determined, after all.
So, here are two blue-chip ASX shares that I think you'd be winning by not buying them at current prices. Just to be clear, I love both companies. I just don't love their current share prices and I think anyone buying in today is at risk of having their investing hearts broken.
Commonwealth Bank of Australia (ASX: CBA)
CommBank is the largest ASX bank and also one of the highest quality, in my opinion. But today, CBA shares are trading at $86.74 (at the time of writing). That puts this bank on a price-to-earnings ratio of 15.74 and a book value ratio of 2.19.
That is considerably higher than CommBank's banking siblings like National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC) – a premium that I don't think is entirely justified (especially considering this company's revenue went backwards last year). I can't see the profit-crushing low interest rates that are the 'new normal' in our economy going away anytime soon either.
Commonwealth Bank's trailing dividend yield of 4.97% isn't enough to overcome these headwinds in my view, so I won't be buying CBA shares at today's levels.
Woolworths Group Ltd (ASX: WOW)
Woolies is a great company, commanding a superior market share in Australia's grocery sector and a highly defensive earnings base. However, I think Woolies' days of massive growth are far behind it. Today, I look at this company as well and truly 'mature'.
However, the current Woolworths share price is in disagreement with my basic assessment.
Right now, Woolies shares are priced with an earnings multiple of 36.91 – which implies a comfortable growth runway for the company (which I don't see). Competition is fierce in this industry and profit margins are razor-thin. And, I don't think Woolies can put too many more stores on the map either.
Even from an income perspective, Woolworths shares offer a dividend yield today of 2.43% – which isn't going to get too many people hot around the collar.
Thus, I think Woolies is another company that could be a heartbreaker when the market realises the runway isn't as long as it hopes.
