President Donald Trump and the Republican Congress will likely pass tax reform in the near future. Goldman’s retail analyst believes retail stocks will be big winners from tax reform.
The Republican current deal reportedly features a corporate tax rate reduction to 21 percent from 35 percent, starting in 2018, and a top individual rate of 37 percent, CNBC and other outlets reported.
“Tax reform legislation has now passed both chambers of Congress. While the final shape of the legislation is still in flux, our economists expect a conference agreement and enactment by year-end,” analyst Matthew Fassler wrote Friday. “Based on the current proposals, we expect that most retailers in our coverage would emerge as net beneficiaries.”
The retail sector is underperforming the market this year. The SPDR S&P Retail ETF is roughly flat year to date through Thursday versus the S&P 500’s 18.5 percent return.
Fassler noted how U.S. retailers generate most of their sales domestically, so the significant reduction of the corporate tax rate will have a large positive impact for the sector’s earnings.
For investors who want to trade on tax reform being implemented, here are 10 retail companies Goldman says will benefit the most in terms of profits:
Best Buy, Office Depot and National Vision are among the top beneficiaries of tax reform, according to the firm.
