3 reasons to buy NAB shares this week

Goldman Sachs says that this banking giant's shares are good value.

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National Australia Bank Ltd (ASX: NAB) shares could be worth considering if you are looking for options in the banking sector this week.

That's the view of analysts at Goldman Sachs, which are bullish on the big four bank.

NAB shares tipped as a buy

According to a recent note, the broker has a buy rating and a $30.51 price target on the bank's shares.

Based on the latest NAB share price of $28.76, this implies a potential upside of 6.1% for investors over the next 12 months.

In addition, the broker is forecasting a fully franked dividend of $1.66 in both FY 2023 and FY 2024. This will mean dividend yields of 5.8% in both years, which boosts the total potential return to almost 12%.

That's comfortably ahead of the 30-year average total return of 9.6% per annum from ASX shares.

Three reasons to buy

Goldman has named three key reasons why it thinks investors should be buying NAB shares right now. The broker explains:

We reiterate our Buy on NAB given: i) we see volume momentum over the next 12 months as favouring commercial volumes over housing volumes, and we believe NAB provides the best exposure to this thematic, ii) NAB has delivered the highest levels of productivity over the last three years and its investments continue to yield benefits (A$400 mn expected in FY23E), which we think leaves it well positioned for an environment of elevated inflationary pressure, iii) NAB's returns improvement vs. peers is not reflected in valuations.

All in all, this could make NAB a good option for investors looking at the banking sector and a potential alternative to the sell-rated Commonwealth Bank of Australia (ASX: CBA), which was covered here earlier.

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 positions in and has recommended Goldman Sachs Group. 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.

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