When investors look for defensive ASX shares, Wesfarmers Ltd (ASX: WES) and Coles Group Ltd (ASX: COL) are often mentioned in the same breath.

Both are household names. Both sell essential products. And both have proven they can perform through different economic conditions.

But if I had to choose between the two today, Wesfarmers would be my preferred buy. That does not mean Coles is a bad business. I just think Wesfarmers offers the more attractive overall package for long-term investors.

The case for Wesfarmers shares

Wesfarmers is not just a supermarket business, and that matters.

While Coles is almost entirely focused on food and liquor retailing, Wesfarmers owns a diversified portfolio of high-quality businesses. These include Bunnings, Kmart, Officeworks, Priceline, WesCEF, and a growing healthcare division.

That diversification gives Wesfarmers multiple earnings levers. When one division is under pressure, others can pick up the slack. Bunnings, in particular, remains a standout asset with strong brand loyalty, scale advantages, and pricing power that is hard to replicate. Masters famously tried and failed.

Another reason I prefer Wesfarmers is capital allocation. Management has a long track record of recycling capital, exiting businesses when returns disappoint, and reinvesting where long-term returns look attractive. That discipline is not always visible quarter to quarter, but it tends to show up over time in shareholder returns.

Wesfarmers is not cheap on headline valuation metrics. But in my view, that reflects the quality and resilience of the underlying businesses rather than excessive optimism.

Why Coles is still a good business

Coles deserves credit for what it does well.

It operates in a highly defensive sector, with food retail demand holding up regardless of economic conditions. Over recent years, Coles has improved its operational execution, supply chain efficiency, and private label offering.

Its earnings profile is relatively predictable, and dividends have been an important part of the investment case for income-focused investors. For those seeking stability and exposure to essential spending, Coles remains a good option.

That said, Coles is more exposed to supermarket-specific pressures. These include competition, margin scrutiny, and regulatory oversight. There are fewer places to hide if conditions become more challenging.

Growth versus simplicity

For me, the difference between these two ASX shares comes down to optionality.

Coles offers simplicity and defensiveness. Wesfarmers offers defensiveness plus growth opportunities across multiple divisions. Over a long investment horizon, I prefer the business that has more ways to grow earnings and redeploy capital.

That does not mean Wesfarmers will outperform every year. There will be periods where Coles does better, particularly if supermarket margins expand or consumer conditions stabilise quickly.

But looking beyond the next twelve months, I think Wesfarmers is better positioned to compound value.

Foolish takeaway

If forced to choose between the two, Wesfarmers would be my pick as the better buy today.

Coles Group remains a solid, defensive business, and I would not discourage investors from owning it. I just think Wesfarmers’ diversification, asset quality, and capital discipline give it a stronger long-term edge.

Sometimes the best investment is not about avoiding risk entirely, but about choosing the business with more paths to success.

The post Wesfarmers vs Coles: Which ASX share is the best buy? appeared first on The Motley Fool Australia.

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• 3 ASX shares that I rate as buys for both growth and dividends

Motley Fool contributor Grace Alvino has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Resolute Mining Ltd (ASX: RSG) has emerged as one of the strongest performers among ASX mid-cap gold stocks over the past year, with its share price up an incredible 217%.

After that run, the stock eased late last week, closing down around 2.3% at $1.29 as the gold price softened. Even so, Resolute shares remain well above levels seen a year ago, and recently reached a 5-year high at $1.35.

With the share price having moved sharply higher, attention is now turning to what has driven the rally and whether it can be sustained.

Here are the key factors investors are weighing up.

What’s behind Resolute’s strong run

Resolute Mining is an Australia-listed gold producer with operations in West Africa, including the Syama mine in Mali and the Mako operation in Senegal.

The company has more than 30 years of experience in exploration, development and production, and has produced over 9 million ounces of gold across 10 mines.

While gold miners typically benefit from rising bullion prices, Resolute’s rally has gone beyond simply riding the commodity cycle. Improving project economics, exploration success and a clearer growth strategy have all helped lift investor confidence.

One important catalyst has been updated feasibility work at the Doropo gold project in Cote d’Ivoire. The revised studies point to improved economics and a larger project scope, which could lift Resolute’s long-term production profile once approvals and funding are in place.

The company will host a quarterly webcast and guidance update on Thursday 22 January, where management is expected to discuss its latest quarterly results.

Why investors kept buying even as gold prices dipped

Despite the recent dip, several factors have supported Resolute’s strong performance.

Firstly, the stock still looks reasonably valued compared with many peers on a price-to-sales basis. Resolute trades at roughly 2 times sales, compared with around 6 times for Evolution Mining Ltd (ASX: EVN), suggesting the market is still pricing Resolute more conservatively.

Secondly, both revenue and earnings have been growing strongly for Resolute, pointing to improving scale and operating momentum.

And finally, expectations around its 2026 guidance have helped underpin sentiment, as investors look for clarity on production and costs.

Even with gold easing slightly, prices remain historically strong. That continues to support Resolute’s cash flow outlook, especially if geopolitical risks or interest rate cuts lift safe-haven demand later this year.

The risks the market is still weighing up

That said, operating in West Africa carries added risk compared with many Australian-based miners.

Resolute has faced challenges in the past, including periods of regulatory uncertainty in Mali and changes in leadership. Political stability, government policy and permitting timelines can all influence operations, sometimes with little warning.

There are also execution risks to consider. Delivering consistent production, controlling costs and managing capital spending remain critical, particularly as the company looks to advance growth projects.

The capital required to develop projects such as Doropo means future returns will depend heavily on management’s ability to execute plans on time and within budget.

What’s next?

Resolute’s 217% share price surge over the past year reflects strong gold prices and improving company fundamentals. However, after such a sharp run, attention is now shifting from momentum to delivery.

With the gold prices softening and a key guidance update approaching, the next few weeks could prove decisive for Resolute shares. Clear targets and steady results may support further upside, while any disappointment could see the stock consolidate after a huge year.

The post Resolute Mining shares have surged 217% in a year. Can the momentum last? appeared first on The Motley Fool Australia.

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• Gold price surges to another record high. Why ASX gold stocks could be next

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Now could be the time to buy Mader Group Ltd (ASX: MAD) shares.

That’s the view of analysts at Bell Potter, which have just upgraded the ASX All Ords stock.

What is the broker saying about this ASX All Ords stock?

Bell Potter notes that this specialised contract labour provider’s shares have pulled back recently, which it believes has created a buying opportunity. Especially given its belief that the company is poised to benefit from favourable industry conditions both at home and in North America. It said:

The Department of Industry, Science and Resources updated its Australian iron ore production outlook (Dec’25), forecasting CAGR of 2.8% over FY25-28 (prev. 2.5%). Delivery of this growth by industry is a major tailwind for MAD’s core Heavy Mobile Equipment and Infrastructure Maintenance service offerings. FY26TD (JulNov’25) WA wholesale diesel consumption was up 2.2% YoY, with a record observed in Oct’25.

WA wholesale diesel consumption correlates very strongly with WA iron ore production. Lastly, the latest financial disclosures of OEMs (Sep’25 quarter) outlined sales and order intake were broadly flat and modestly up, respectively.

Over in North America, Bell Potter believes the ASX All Ords stock could be well-placed for new contract wins. It adds:

Several indicators point to a favourable environment for securing new business across the region. Firstly, our proxy for USA mining complex activity has progressively improved since the 2024 elections, with the index up 4.1% YoY for the period Jul-Nov’25. Secondly, in Canada, MAD’s key markets have seen strong YoY production growth over Jul-Oct’25: 4.4% for coal; 15.9% for copper; 10.8% for lime; and 3.0% for oil sands (hard rock).

Lastly, regional OEMs and dealers have generally seen stable-to-improving YoY growth in their respective Product Sales businesses, indicating miner commitments to maintaining and growing fleet. Large Canadian mining dealers have reported mid-single digit to mid-teens YoY revenue growth for their respective Product Support divisions over the Jun’25 and Sep’25 quarters.

Upgraded

In light of the above and recent share price weakness, the broker has upgraded Mader’s shares to a buy rating and $9.00 price target.

Based on its current share price of $7.77, this implies potential upside of 16% for investors over the next 12 months.

Bell Potter also expects a modest 1% dividend yield in FY 2026, lifting the total potential return to approximately 17%.

Commenting on the ASX All Ords stock’s recommendation upgrade, the broker said:

We upgrade our Recommendation to Buy. The recent retracement in MAD’s share price offers investors a more attractive risk-reward proposition, with 17.2% TSR implied by our $9.00/sh Target Price. We maintain the view that consensus expectations are conservative (FY26e NPAT of $67.6m; BPe $69.6m; NPAT guidance >$65.0m). Disclosure of MAD’s next 5-year strategy represents a near-term catalyst.

The post Why Bell Potter just upgraded this ASX All Ords share to a buy rating appeared first on The Motley Fool Australia.

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The ASX dividend stock Sonic Healthcare Ltd (ASX: SHL) has dropped 36% since April 2023, as the chart below shows. I think it’s fair to say that the last few years have been rough for shareholders following the COVID-19 testing boom.

Sonic Healthcare is a global pathology business with a presence in a number of Western countries including the USA, Australia, Germany, Switzerland, the UK, Belgium and New Zealand.

I think it’s useful for the business to have geographic exposure as this allows it to expand in a number of countries and reduces the risk of being too exposed to one country.

Its dividend record alone makes the ASX dividend stock an exciting investment.

Incredible payout record

When I invest in dividend-paying businesses, I’m looking for companies that provide stable and hopefully growing payments.

Sonic Healthcare increased its payout per share every year between 1994 and 2010, maintained the payout in 2011 and 2012 and has grown it every year since. It has one of the most consistent and impressive dividend records on the ASX over the last three decades.

Dividend growth is not guaranteed, but it’s clear that Sonic Healthcare is focused on paying investors as good a dividend as it can while still investing for growth.

The business itself has committed to having an ongoing “progressive dividend policy”, which bodes well for future payments.

The forecast on CMC Markets suggests that the business could pay an annual dividend per share of $1.10 in FY26. Excluding any potential franking credits, that projection translates into a dividend yield of 4.7%.

It’s expected to grow the annual payout to $1.12 per share in FY27 and $1.155 in FY28. If it does that, the business will be able to provide investors with steady passive income.

Is this a good time to invest in the ASX dividend stock?

It’s not generating the same level of profit that it did during the COVID-19 testing surge, but its earnings are expected to rise thanks to organic growth and acquisitions. It has made a number of European acquisitions to help boost its scale and earnings base.

The projection on CMC Markets suggests the business could grow earnings in FY26 and beyond. In FY26, earnings per share (EPS) could increase to $1.25. EPS could then improve to $1.36 in FY27 and $1.46 in FY28. It’s currently valued at under 19x FY26’s estimated earnings.

Its EPS is being helped by ageing and growing populations, which are strong tailwinds for the business. While its best growth rate may be behind it, I think it’s still a solid ASX dividend stock for the long-term.

The post 1 ASX dividend stock down 36% I’d buy right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

These 2 ASX 200 shares stand out for investors willing to think in years rather than days: CSL Ltd (ASX: CSL) and Temple & Webster Group Ltd (ASX: TPW).

One sells essential medicines to the world. The other sells couches, lamps and coffee tables to Australians who like shopping from the sofa.

Different businesses, different risks, but both have credible paths to long-term wealth creation.

CSL Ltd (ASX: CSL)

CSL sits at the heavyweight end of the market. The $85 billion ASX 200 share operates a global biotechnology empire built around plasma-derived therapies, vaccines and specialty medicines. Demand for these products doesn’t disappear when economies slow or consumers tighten their belts. People still need treatment, and hospitals still place orders.

The ASX 200 biotech stock has stumbled over the past couple of years as margins came under pressure and earnings upgrades failed to materialise. That has tested investor patience.

But CSL continues to generate strong cash flow, invest heavily in research and streamline its operations. Its scale, pricing power and global reach give it an edge few competitors can match. Over a 10-year stretch, that combination matters far more than a rough patch or two along the way.

Closing the week at $175.53, the company’s shares remain close to their 52-week low. The ASX 200 share tumbled more than 30% in the past 6 months.

For a business long regarded as one of the ASX’s highest-quality names, such a sharp pullback inevitably prompts the question: does this represent a rare long-term buying opportunity?

Most analysts do think this might the time to pounce and rate CSL a buy or even a strong buy. They set the average 12-month price target at $232, a potential gain of 32%.  

Temple & Webster Ltd (ASX: TPW)

Temple & Webster tells a very different story. The ASX 200 share operates an online-only homewares platform that offers thousands of products without the burden of running a network of physical stores. The model keeps costs low and allows the business to scale as demand grows.

Like most growth stocks, Temple & Webster has ridden a volatile path. Rising interest rates, housing slowdowns and cautious consumers have weighed on sentiment. Yet the business continues to win customers, improve logistics and expand its product range. As conditions normalise and online retail continues to take share from traditional stores, Temple & Webster has room to grow into a much larger business than it is today.

Just like CSL, Temple & Webster has been hovering around 52-week lows. In the past 6 months the ASX 200 share has lost 40% of its value and the broker community has taken notice.

Most analysts rate the stock now as a buy or strong buy, with an average 12-month price target of $20.42, implying around 60% upside. The most bullish forecasts point to potential gains of more than 115%.

The post 2 ASX 200 shares to buy and hold for 10 years appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Temple & Webster Group. The Motley Fool Australia has recommended CSL 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.

Shares in ALS Ltd (ASX: ALQ) finished last week on a strong note, closing up 1.88% at $23.86.

Earlier in Friday’s session, the ALS share price also hit a fresh all-time high of $23.91, marking another milestone in what has been an impressive run.

Over the past 12 months, ALS shares are now up around 53%, comfortably outperforming the S&P/ASX 200 Index (ASX: XJO). With momentum clearly building, investors may be wondering whether the rally still has room to run.

Let’s take a closer look.

Why ALS shares are back in the spotlight

ALS is a global testing, inspection, and certification business, operating across commodities, life sciences, energy, and industrial markets.

The company runs more than 370 sites across around 65 countries, giving it a diversified earnings base. That global footprint has helped smooth earnings across cycles and reduce reliance on any single market.

In its H1 FY26 results, ALS reported underlying EBIT growth of around 14.7%, driven by solid demand across its core divisions. Management also pointed to improving operating margins and continued cost discipline.

That result reinforced the market’s view that ALS remains well positioned despite broader economic uncertainty.

A reliable dividend with growth on top

ALS also continues to reward shareholders with dividends.

The company paid an interim dividend of around 19.4 cents per share, carrying a franking credit of close to 30%. While ALS is not a high-yield stock, the dividend provides a steady income stream alongside capital growth.

What the ALS chart is saying

The relative strength index (RSI) is hovering around 65, which suggests bullish conditions, though the stock is not yet at extreme overbought levels.

The share price is also trading above both its 50-day and 200-day moving averages, confirming a strong medium and long-term uptrend.

In terms of volatility, ALS has a beta of around 1.09, meaning it tends to move broadly in line with the market.

Support and resistance levels to watch

Now that ALS has moved above its previous highs, the $23.90 level could act as short-term support.

Below that, the $22 to $22.50 zone is an important support area based on recent trading activity. Further down, longer-term support sits closer to $21.50 to $21.80.

On the upside, the next psychological resistance level sits around $25.00, which some analysts see as a potential medium-term target if momentum continues.

Foolish takeaway

ALS has delivered strong gains, but the recent rally is backed by solid earnings growth, global diversification, and improving margins.

While short-term pullbacks are always possible after hitting an all-time high, the broader trend remains positive.

For investors looking for a quality industrial stock with momentum and defensiveness, ALS is one worth keeping on your watchlist.

The post This ASX stock just hit an all-time high. Is there more upside ahead? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are on the hunt for some of the best ASX shares to buy this month, then it could pay to listen to analysts at Bell Potter.

They have revealed a number of shares that they believe are best buys right now and could offer good returns in 2026. Let’s see what the broker is bullish on in January:

Region Group (ASX: RGN)

The first ASX share that could be a best buy is Region Group. It offers a defensive way to gain exposure to Australian retail property. The company owns a portfolio of neighbourhood and sub-regional shopping centres anchored by supermarkets and essential services. This positioning helps stabilise rental income, as demand for food, healthcare, and everyday services tends to hold up even when discretionary spending softens.

Bell Potter sees value in Region Group’s focus on convenience-based retail, which benefits from high foot traffic and resilient tenant demand. With inflation-linked rental growth and improving operating conditions across parts of the retail property sector, the broker believes the company is well placed to deliver steady income and long-term value for investors. It said:

Whilst the immediate catalyst is valuation uplift, we also see a strong case for medium-term rental growth (c.15% under rented vs. benchmark; 9.7% specialty occupancy cost ratio is low vs historical levels/peers), adding to our longer-term conviction in the stock.

Telix Pharmaceuticals Ltd (ASX: TLX)

Another ASX share that Bell Potter is bullish on is Telix Pharmaceuticals. It specialises in radiopharmaceuticals used in the diagnosis and treatment of cancer, which is an area of medicine that continues to attract strong interest and investment globally.

Its flagship products and development pipeline position Telix at the heart of medical innovation and increasing demand for more targeted cancer therapies.

Bell Potter is positive on Telix’s commercial momentum and longer-term growth outlook. As adoption of its products expands and new therapies progress through development, the broker believes Telix has the potential to deliver strong earnings growth over time. Especially with potential product approvals on the horizon. It said:

We are confident regarding the approval in CY 2026 of Zircaix following resubmission of the Biological License Application (BLA). The FDA rejected the original BLA due to CMC (chemistry manufacturing & control) matters at Telix’s manufacturing partner. There were no matters related to safety or efficacy.

We expect the market for Zircaix once approved will be in excess of US$500m. The product has been included in guidelines for disease management in the US and Europe and continues to be available in the US under the expanded access program. Elsewhere, sales of Iluuccix/ Gozellix in the PSMA franchise continue to grow and were recently boosted by the refresh on the pass through pricing.

The post Bell Potter says these ASX shares are best buys in January appeared first on The Motley Fool Australia.

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If you have $1,000 to invest and you are wondering where to start, I think the Vanguard MSCI Index International Shares ETF (ASX: VGS) is a very sensible option to consider.

It is not flashy. It will not double overnight. But for investors thinking in years rather than weeks, I believe the VGS ETF offers exactly the kind of foundation investment that makes sense.

What does the VGS ETF actually invest in?

The Vanguard MSCI Index International Shares ETF gives you access to around 1,300 stocks across developed markets outside Australia.

That includes major economies like the United States, Japan, the United Kingdom, Canada, France, and Switzerland. In practical terms, it means you are investing in many of the world’s most influential businesses, including global leaders in technology, healthcare, consumer goods, and industrials.

This matters because the Australian share market is relatively narrow. Banks, miners, and domestic retailers dominate the ASX. The VGS ETF helps fill the gaps by providing access to sectors that are underrepresented locally, particularly technology and global healthcare.

Holdings include Apple, Nestle, Nvidia, ASML, HSBC, and Rolls-Royce.

Why $1,000 makes sense

One of the biggest challenges for new investors is diversification.

With $1,000, buying individual shares can leave you overly exposed to a single ASX share or sector. The Vanguard MSCI Index International Shares ETF solves that problem immediately. With one investment, you gain broad global diversification across over a thousand businesses and multiple economies.

I also think $1,000 is a great way to get started psychologically. It is large enough to matter, but small enough that short-term market movements should not cause stress. That makes it easier to stay invested, which is ultimately what drives long-term returns.

A long-term growth focus

The VGS ETF is not designed to be an income investment. Its yield is modest compared to Australian dividend stocks.

The role of this ETF is long-term capital growth. Over time, global stocks have benefited from innovation, scale, and access to much larger markets than most Australian businesses. While returns will vary year to year, history suggests that global equities can compound strongly over long periods.

For someone investing $1,000 today, the real value comes from what that investment could look like in ten, twenty, or thirty years, especially if dividends are reinvested and additional contributions are made over time.

What about risk?

Like all share market investments, the VGS ETF will be volatile.

Its value will move with global markets and currency fluctuations, as it is not hedged back to the Australian dollar. That can work for or against investors in the short term. Over long periods, I see that currency exposure as a feature rather than a flaw, as it adds another layer of diversification.

The key point is that the Vanguard MSCI Index International Shares ETF should be approached with a long-term mindset. If you need the money in the next year or two, this may not be the right place for it.

Foolish takeaway

If you are asking whether investing $1,000 in the Vanguard MSCI Index International Shares ETF makes sense, my answer is yes.

It offers instant diversification, exposure to global growth, low fees, and a simple structure that is easy to understand and hold. As a starting point or as part of a broader portfolio, I think the VGS ETF is a strong long-term building block for investors in 2026 and beyond.

The post Should I invest $1,000 in the VGS ETF? appeared first on The Motley Fool Australia.

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HSBC Holdings is an advertising partner of Motley Fool Money. Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ASML, Apple, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended HSBC Holdings and Rolls-Royce Plc. The Motley Fool Australia has recommended ASML, Apple, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Boss Energy Ltd (ASX: BOE) remains the most shorted ASX share for another week even after its short interest eased slightly to 19.5%. Short sellers have successfully targeted this uranium producer after it released a disappointing production update on the Honeymoon Project.
• Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest ease slightly again to 17.6%. Short sellers appear to be doubting that this pizza chain operator’s turnaround strategy will be a success.
• Guzman Y Gomez Ltd (ASX: GYG) has short interest of 13.7%, which is flat week on week. This burrito seller’s shares trade on extremely high multiples. And with its US expansion disappointing the market, some may believe this premium isn’t justified.
• Paladin Energy Ltd (ASX: PDN) has short interest of 12.5%, which is down week on week again. There may be concerns over potential operational challenges for this uranium miner.
• IDP Education Ltd (ASX: IEL) has 12.2% of its shares held short, which is down week on week again. Major student visa changes in key markets have weighed on this language testing and student placement services company’s performance.
• PWR Holdings Ltd (ASX: PWH) has short interest of 11.7%, which is down since last week. Unfortunately for short sellers, this advanced cooling products and solutions provider’s shares jumped to a 52-week high last week thanks to a defence contract win.
• Polynovo Ltd (ASX: PNV) has short interest of 11.5%, which is down since last week. This medical device company’s shares may have been targeted due to valuation concerns.
• Telix Pharmaceuticals Ltd (ASX: TLX) has short interest of 11.3%, which is flat week on week. This radiopharmaceuticals company had a tough time in 2025 when it experienced delays to FDA approvals and increased regulatory scrutiny.
• DroneShield Ltd (ASX: DRO) has short interest of 11%, which is down slightly since last week. Short sellers seem to think that this counter drone technology company’s shares are overvalued following very strong gains in 2025.
• Treasury Wine Estates Ltd (ASX: TWE) has entered the top ten with short interest of 10.4%. This wine giant is having a tough time due to distributor uncertainty and unfavourable consumer trends.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises, DroneShield, PWR Holdings, PolyNovo, and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended PWR Holdings. The Motley Fool Australia has recommended Domino’s Pizza Enterprises, Flight Centre Travel Group, PolyNovo, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

For years, Commonwealth Bank of Australia (ASX: CBA) shares have been the market’s favourite comfort stock. Rock-solid brand, dependable dividends and a balance sheet investors trust with their lives.

So far in 2026, the banking giant’s shares are down almost 4% and now sit 14.5% below their level of six months ago.

The weakness follows a stellar 2025, when CBA shares staged a powerful rally and surged to a record high of $192.00 in June.

Here are three reasons some investors are quietly heading for the exit.

Overvalued with modest growth

First, the valuation has gone from premium to punchy. CBA shares trade well above their big-four peers on almost every traditional metric. Its price-to-earnings and price-to-book ratios suggest investors are paying luxury-car prices for a stock growing more like a family sedan.

CBA is currently trading at a price-to-earnings (P/E) ratio of 26.68, significantly higher than its major Australian banking peers. By comparison, Westpac Banking Corp (ASX: WBC) trades at a P/E of approximately 19.64, National Australian Bank Ltd (ASX: NAB) at around 19.20, and ANZ Group Holdings Ltd (ASX:ANZ) at about 18.67.

The problem? Banks aren’t high-growth tech plays. Earnings growth is modest at best, yet the market continues to price $258 billion CBA as if it deserves a permanent gold star. When expectations are this high, even a small disappointment can trigger an outsized share price reaction.

Squeezed margins, fierce competition

Second, profit margins are under pressure — and that’s hard to ignore. Net interest margins, the lifeblood of bank profitability, are being squeezed from all sides. Competition for deposits is fierce, funding costs remain elevated, and political pressure keeps mortgage pricing tight.

While CBA is arguably the best-run bank in the country, it can’t escape industry physics. If margins keep narrowing, earnings growth slows and suddenly that premium valuation looks even harder to justify.

Home lending risk

Third, the housing market cuts both ways. CBA’s dominance in home lending has long been a strength, but it also creates concentration risk. Australian households are carrying high debt levels, and cost-of-living pressures haven’t magically disappeared.

A weaker economic backdrop, rising unemployment or falling house prices could push loan impairments higher. Investors don’t need a housing crash to feel pain. Even a mild deterioration in credit quality can dent profits and sentiment.

This doesn’t mean CBA is a poor bank. It remains a high-quality business with strong capital, loyal customers and dependable dividends.

What do analysts think?

For long-term investors, the real question may be whether their capital is working hard enough, as other sectors offer better growth, value or income, making the case to trim CBA shares more about opportunity cost than risk.

Most brokers share this sentiment. TradingView data shows that 13 out of 15 analysts have a sell or strong sell rating on CBA shares. The average 12-month target price is $124.90 a piece, which implies a 19% drop at the time of writing.

But some analysts think CBA’s share price will plummet even more sharply down to $99.81 per share. That suggests a significant 35% drop over the next 12 months.

The post 3 reasons why it’s time to sell your CBA shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.