Top Stocks for a Trump Tax Cut

11/24/2016 7:00 am EST

Focus: STOCKS

John Buckingham

Editor, The Prudent Speculator

The markets have been quick to make bets on the winners and losers of a Trump presidency, even as there are more than the usual number of uncertainties about what policies actually might be implemented, notes John Buckingham, editor of The Prudent Speculator.

Looking at specific sectors and industries, it would seem to be clear that Industrials, especially those linked to construction and defense, should benefit due to infrastructure spending and a strengthening of the military.

Also, Financials should benefit from less regulation and rising interest rates. On the other hand, higher interest rates have hurt defensive areas.

The include Consumer Staples, Telecom, Utilities and REITs, while multi-national manufacturers with operations outside the U.S. who import back in to the States could be hurt by tariffs.

And Information Technology stocks could face difficulties in hiring qualified employees if immigration is tightened.

Given Republican control of both the House and the Senate, it is likely that tax reform, both at the individual and the corporate level, is something that  would be taken up quickly.
While Mr. Trump has argued for a 15% corporate tax rate in the past, something higher might be the likely compromise.

Goldman Sachs has estimated that the effective tax rate for companies in the S&P 500 has been in the 30% range over the past decade, a figure that our primary number cruncher Chris Quigley has confirmed with independent calculations via Bloomberg.

Certainly, a lower tax rate would do wonders for corporate profits, all else being equal.

Below is a diversified list of undervalued high (30%+) U.S. taxpayers that might be expected to be among the largest beneficiaries of a cut in corporate taxes in terms of the impact on their respective bottom lines.

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By John Buckingham, Editor of The Prudent Speculator

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