The Winners and Losers of Tax Reform

By Phil Davidson, CFA - August 23, 2018

For all the talk about the U.S. tax reform that went into effect this year, you might have thought it was going to be a bottom-line bonanza for every American company. Not true.

Of course, corporations will gratefully accept every tax advantage they receive, but not all will benefit equally. In fact, my analysis indicates there will be pretty wide gaps between the winners and losers. Yes, even in the windfall of tax reform, there are going to be some relative losers.

Here’s the critical question, from where I sit: how much of the tax benefit will companies actually keep, and how much will they reinvest or “compete away” to maintain their market advantages? My team and I have spent a lot of time in recent months finding answers to that question, and here’s what we’ve concluded: a stock we considered overvalued last year would not land in the undervalued category today as a result of this tax reform.

There will be, however, some industries that stand to benefit more than others. Click on the video below to find out which ones we’re especially optimistic about.