T. Rowe Price Group Inc. (TROW), Charles Schwab Corp. (SCHW) and E*Trade Financial Corp. (ETFC) are among a dozen stocks Barron’s has stated are in the best position to most significantly benefit from substantial corporate tax changes proposed by the U.S. House of Representatives that was recently endorsed by President Trump.
The aforementioned investment companies all earn significant profit in the U.S. while paying high tax rates, so they would benefit more than most from a simple tax rate reduction. (See also: How Trumps Tax Plan Is Dividing Corporate America.)
The House plan Trump is favoring includes a border-adjustable tax that taxes imports and does not tax exports, which essentially eliminates incentives for companies in the U.S. to outsource jobs to other countries. In this tax plan, Congress could also lower the tax rate in the upper tier to 20 percent from 35 percent and move to a system that does not tax foreign earnings.
Charles Schwab and E*Trade stocks, along with the broader financial sector, have held gains from a post-election rally in November. Financial Select Sector SPDR Fund (XLF) is up 23.2 percent since Nov. 7. T. Rowe Price's stock had joined the rally, but shares have since declined amid about $5 billion in investor withdrawals in the fourth quarter, according to The Baltimore Sun. (See also: Trump Tax Cuts Will Keep These Stocks Flying.)
The other stocks Barron’s named that can significantly benefit from the House's tax plan: Union Pacific Corp. (UNP) CSX Corp. (CSX), Norfolk Southern Corp. (NSC), Aetna Inc. (AET), Anthem Inc. (ANTM), Humana Inc. (HUM), UnitedHealth Group Inc. (UNH), Conagra Brands Inc. (CAG) and Chipotle Mexican Grill Inc. (CMG).