GOLDMAN SACHS: These 16 stocks are poised to maximize tax savings and crush the market in 2018

  • Wide-reaching corporate tax cuts have stock investors wondering which companies will benefit most.
  • Goldman Sachs has singled out 16 companies as offering the most reinvestment growth, a characteristic of companies that have historically outperformed the market.

How does an investor decide which companies are poised to benefit most from sweeping tax cuts that affect nearly 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 price is most likely to get a boost from the new tax law, given their past use of excess capital.

Goldman's basket includes not just the companies that have most heavily reinvested money into capital expenditures and research and development, but also those set to generate the highest return on it.

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 with 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: 

16 PHOTOS
Stocks set to crush the market this year
See Gallery
Stocks set to crush the market this year

16. Wynn Resorts

Ticker: WYNN

Industry: Consumer discretionary

Year-to-date return: -2%

Three-year growth investment ratio:101%

15. CF Industries

Ticker: CF

Industry: Materials

Year-to-date return: +2%

Three-year growth investment ratio:104%

14. Amazon

Ticker: AMZN

Industry: Consumer discretionary

Year-to-date return: +27%

Three-year growth investment ratio:104%

13. Under Armour

Ticker: UAA

Industry: Consumer discretionary

Year-to-date return: +15%

Three-year growth investment ratio:107%

12. Concho Resources

Ticker: CXO

Industry: Energy

Year-to-date return: -1%

Three-year growth investment ratio:110%

11. Celgene

Ticker: CELG

Industry: Healthcare

Year-to-date return: -10%

Three-year growth investment ratio:115%

10. Eli Lilly

Ticker: LLY

Industry: Healthcare

Year-to-date return: -8%

Three-year growth investment ratio:121%

9. Synopsys

Ticker: SNPS

Industry:Information technology

Year-to-date return: -1%

Three-year growth investment ratio:126%

8. Cadence Design Systems

Ticker: CDNS

Industry:Information technology

Year-to-date return: -7%

Three-year growth investment ratio:147%

7. General Motors

Ticker: GM

Industry: Consumer discretionary

Year-to-date return: 0%

Three-year growth investment ratio:157%

6. Regeneron Pharmaceuticals

Ticker: REGN

Industry: Healthcare

Year-to-date return: -16%

Three-year growth investment ratio:167%

5. Bristol-Myers Squibb

Ticker: BMY

Industry: Healthcare

Year-to-date return: +8%

Three-year growth investment ratio:189%

4. Chesapeake Energy

Ticker: CHK

Industry: Energy

Year-to-date return: -19%

Three-year growth investment ratio:220%

3. Autodesk

Ticker: ADSK

Industry:Information technology

Year-to-date return: +7%

Three-year growth investment ratio:278%

2. Vertex Pharmaceuticals

Ticker: VRTX

Industry: Healthcare

Year-to-date return: +5%

Three-year growth investment ratio:495%

1. Incyte

Ticker: INCY

Industry: Healthcare

Year-to-date return: -10%

Three-year growth investment ratio:831%

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE
 

 

More from Business Insider:
3 crypto exchanges are planning to hire more than 1,000 staff — but it's not going to be easy 
Toys R Us goes into administration in Britain, putting 3,200 jobs at risk 
Israel's Bezeq names Paz as acting CEO during police investigation

SEE ALSO: One of the market's most outspoken bears is getting destroyed as he waits for a crash

Read Full Story

Markets

DJIA 25,659.25 100.52 0.39%
NASDAQ 7,800.40 -6.12 -0.08%
NIKKEI 225 22,270.38 78.34 0.35%
HANG SENG 27,213.41 113.35 0.42%
DAX 12,210.55 -26.62 -0.22%
USD (per EUR) 1.14 0.00 0.37%
USD (per CHF) 0.99 0.00 -0.29%
JPY (per USD) 110.43 -0.56 -0.51%
GBP (per USD) 1.27 0.00 0.21%