Is this banking giant a buy?
The post Could it be time to consider buying NAB (ASX:NAB) shares? appeared first on The Motley Fool Australia. –
Despite a recent blip, National Australia Bank Ltd (ASX: NAB) shares have still smashed the market in 2021.
Since the start of the year, the banking giant’s shares have risen by 18%.
This is double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.
Could now be the time to buy NAB shares?
Although NAB shares are outperforming in 2021, one leading broker believes this trend can continue.
According to a recent note out of Goldman Sachs, its analysts have a conviction buy rating and $30.62 price target on the bank’s shares.
So, with NAB shares currently changing hands for $27.10, this implies potential upside of 13% over the next 12 months before dividends.
In addition, Goldman is forecasting a fully franked $1.40 per share dividend in FY 2022. If you include this, the potential total return stretches to 18.1%.
What did Goldman say?
Goldman notes that NAB is its top pick among the major banks. This is due partly to its cost management and strong position in business banking. It also sees significant value in NAB shares at the current level.
The broker explained: “We reiterate our Buy (on CL) on NAB and it remains our preferred sector exposure given: i) NAB’s cost management initiatives, which seem further progressed relative to most of its peers, should drive productivity benefits sooner and free up investment spend to be directed more towards customer experience, as opposed to infrastructure (3Q21 update shows NAB is tracking well against this); ii) given NAB’s position as the largest business bank and investment in its mortgage capability, we believe it is strongly positioned to benefit from the current recovery in both housing and commercial volumes (3Q21 update showed continued volume momentum); iii) NAB continues to effectively manage the balance between volumes and margins as well as any peer; and iv) our TP offers c. 18% TSR potential.”
Should you invest $1,000 in NAB right now?
Before you consider NAB, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and NAB wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
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Motley Fool contributor James Mickleboro 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 Bruce Jackson.