Wide-reaching corporate tax cuts have stock investors wondering which companies will benefit most. Goldman Sachs has singled out the 16 companies that offer the most reinvestment growth, a characteristic of companies that have historically outperformed the market - R. Zurrer for Money Talks
How does an investor decide which companies are poised to benefit most from sweeping tax cuts that benefit most everyone? Listen to Goldman Sachs, of course.
The firm has developed an index of stocks called the High Growth Investment Ratio Basket, which is designed to include companies whose share prices are most likely to get a boost from tax reform, given their past use of excess capital.
For context, the median stock in the index has reinvested 81% of its trailing three years of cash flow from operations, compared with just 13% for the average S&P 500 company, according to Goldman. The firm also forecasts that basket members will offer 18% cash return on capital invested, compared to just 12% for the broader benchmark.
Without further ado, here are the 16 stocks that best fit the bill, arranged in increasing order of three-year growth investment ratio: