Overinvested in NAB shares? Here are 2 alternative ASX 200 shares

There are some blue chips I'd rather buy than NAB.

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National Australia Bank Ltd (ASX: NAB) shares were a great investment in 2024, delivering a rise of more than 22%. However, with those gains, some shareholders may feel the portion of their portfolio invested in the ASX bank stock has grown too large and they'd prefer to allocate some of the gains elsewhere.

But what sorts of businesses would be good investments right now for NAB shareholders?

If I were looking to reallocate some of my gains from NAB shares, I would diversify away from the banking sector and instead put the investment money towards some different S&P/ASX 200 Index (ASX: XJO) sector opportunities.

So, let's take a look at two ASX shares outside the banking sector that could be attractive for potentially faster growth and less competition than NAB.

Sonic Healthcare Ltd (ASX: SHL)

NAB makes a large proportion of its earnings in Australia, so it could be useful to diversify by looking at a business with major earnings outside of Australia. There's also a risk to NAB earnings in the near term with the potential for rising mortgage arrears among its customers amid high interest rates and inflation. It may also be a good idea to consider a defensive ASX 200 stock to help counteract that threat.

Sonic Healthcare is a global pathology business. The ASX healthcare share has a presence in the United States, Australia, Germany, Switzerland, the United Kingdom, Belgium, and New Zealand.

The company plays an important part in the healthcare systems of the countries it operates in. Since we don't choose when we get sick, demand is fairly consistent throughout economic cycles.

This ASX 200 stock is seeing steady and long-term revenue growth from tailwinds in its operating countries, including ageing and growing populations. It wasn't surprising to me that Sonic's total revenue grew 10% in the first four months of FY25 – much stronger than what owners of NAB shares are seeing.

Sonic Healthcare is expecting operating profit (EBITDA) to grow by around 10% in FY25. Earnings growth looks positive in the coming years, with recent acquisitions, easing cost inflation and increasing usage of technology/artificial intelligence (AI) throughout the business to boost productivity.

The company has grown its dividend every year for the past decade and has a current dividend yield of around 3.8%.

REA Group Ltd (ASX: REA)

Owning NAB shares is a big bet on the Australian economy and largely the Australian property market. If investors want to profit from Australia's property market, another option outside of NAB would be to invest in the business that owns realestate.com.au.

REA Group's real estate portal receives an average of 132.4 million realestate.com.au monthly visits, four times more than its nearest competitor. That market strength allows the ASX 200 stock to increase listing prices regularly with little detriment.

The FY25 first quarter update highlighted the company's ability to grow revenue at a decent pace and for profit to rise even faster — quarterly revenue rose 21% to $413 million and operating profit (EBITDA) increased 23% to $236 million.

It also appears the company is experiencing similar success in India, which obviously has a much larger population than that of Australia and, therefore, greater potential. The FY25 first quarter saw revenue growth of 42% year over year in that market thanks to strong growth in adjacency services, as well as continued momentum on Housing.com.

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Motley Fool contributor Tristan Harrison has positions in REA Group. 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.

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