INVESTING
58 KIPLINGER’S PERSONAL FINANCE^ 05/2017SINCE PRESIDENT DONALD TRUMP’S
surprise victory in November, Wall
Street has been scrambling to identify
businesses that have the most to gain
under the new administration. The
stock market’s broad advance to re-
cord highs suggests that investors
saw winners almost everywhere they
looked. But as Trump’s “America First”
themes translate into actual policies, it
should become clearer which compa-
nies could be the biggest beneficiaries.
We went hunting for potential
America First stocks, using several cri-
teria. To start, we wanted companies
that derive the vast majority of their
sales domestically and stand to do well
if Trump makes good on his promise
to sharply boost U.S. economic growth.
Then we looked for businesses that
would benefit from specific Trump
themes—for example, ramping up job
creation and stoking wage growth,
which could spur consumer spending;
increasing outlays for infrastructure
projects; and promoting U.S. exports.
Other considerations included Trump’s
pledge to cut corporate tax rates and
his vow to eliminate what he considers
excessive business regulation.
We came up with seven companies
that we think qualify as great America
First investment ideas. Three major
caveats: First, there’s no guarantee that
Trump’s policies will emerge as prom-
ised. Second, even if they do, there’s
no assurance that they will work as
touted—unintended consequences
could turn some likely business win-
ners into stunned losers. Third, record-
high stock prices may already ref lect7 Great All-American Stocks
These companies do most of their business at home and stand to benefit from the Trump
administration’s initiatives. BY TOM PETRUNOSTOCKSmuch of any bump in the profitability
of America First companies.
That said, here are our seven picks
(share prices are as of February 28; for
more data, see the table on page 60).1
BANK OF AMERICA (SYMBOL BAC,
$25) BofA may actually be the
closest thing to “America’s bank.”
With $2.2 trillion in assets, it is second
in size only to JPMorgan Chase (JPM).
But unlike its biggest rivals, BofA is
mostly a homebody: 88% of its revenue
comes from U.S. operations, including
credit cards, small-business loans and
its Merrill Lynch brokerage subsidiary.
BofA nearly collapsed during the
2008–09 financial crisis, but it was
saved by the government’s massive
bank-bailout program (the company
has repaid Uncle Sam). BofA remade
itself by jettisoning bad mortgages,
slashing costs and refocusing on its
basic businesses. Customers stuck
with it: BofA’s deposits have surged
to $1.26 trillion, from $805 billion
in 2007.
Now earnings are rebounding at
a healthy pace. Profits rose by 14%
in 2016, and analysts on average ex-
pect a 16% gain in 2017. Key to the out-
look is the assumption that the Federal
Reserve will continue to slowly raise
short-term interest rates, allowing
BofA (and other banks) to boost earn-
ings by hiking the rates it charges for
loans faster than the rates it pays on
deposits. Given its dependence on the
U.S. economy, the bank could also gain
from any Trump policies that speed
growth and lessen financial regula-tion. Brokerage Keefe, Bruyette
& Woods says that overall, Bank
of America has “the best earnings
trajectory of its peers.”2
CINTAS (CTAS, $118) Should the
job market get the kind of boost
Trump has promised, Cintas could
be a major beneficiary. It’s the largest
provider of uniforms for businesses,■ RETAILER HOME DEPOT
SHOULD BENEFIT IF
PRESIDENT TRUMP’S
POLICIES BOOST JOB
GROWTH AND WAGES.