Stocks With Strong Potential Earnings Boost From Trump Tax Plan

Companies that have low effective tax rates due to current “tax loop holes” may find their effective tax rate rise (and profits decline), even if nominal corporate tax rates decline, because “tax loop holes” may be closed to pay for the tax rate change

Companies that have effective tax rates near the nominal rates, would likely see their effective tax rate fall (and profits rise), if nominal corporate tax rates decline

Searching for companies that may benefit from a tax rate decline, and are otherwise potentially attractive is a useful exercise

We found 22 stocks among all listed with favorable yield and valuation attributes that may provide interesting Trump tax plan return potential

We found 100 stocks in the S&P 500 with effective tax rates from 30% to 35% that would like benefit significantly from a corporate tax reduction

34 of those 100 S&P 500 stocks are in current up trends.

Our search for stocks with favorable yield and valuation was of all listed US stocks, for those with these characteristics:

7-year cumulative effective tax rate greater than 30% and less than 36%

12-mo trailing dividend yield greater than 2%

PEG ratio less than 2

12-mo trailing shareholder yield (dividend yield + buyback yield) is no less than dividend yield (no share issuance).

There are companies with tax rates  much higher than the nominal rates. Those cases are too complicated for this simple search, and that is why we limited the effective tax range to less than 36%. The 30% minimum is to find those with a substantial potential benefit from a corporate tax rate reduction.

These are the 22 companies that came through the filter criteria:

DE Deere & Company HMC Honda Motor Co Ltd (ADR) ETH Ethan Allen Interiors Inc. PII Polaris Industries Inc. HOG Harley-Davidson Inc AFL AFLAC Incorporated LM Legg Mason Inc PDCO Patterson Companies, Inc. IPG Interpublic Group of Companies TEO Telecom Argentina SA (ADR) AMX America Movil SAB de CV (ADR) HRB H & R Block Inc GATX GATX Corporation IX ORIX Corporation (ADR) AEO American Eagle Outfitters M Macy’s Inc PAG Penske Automotive Group, Inc. BBY Best Buy Co Inc NVEC NVE Corp MINI Mobile Mini Inc NSC Norfolk Southern Corp. CPPL Columbia Pipeline Partners LP