Railroad Stocks Will Benefit From U.S. Corporate Tax Cut
One of the big reasons is taxes. The railroad stocks are not multinationals. They only operate in the U.S. and they pay the U.S. corporate tax rate.
If President Donald Trump does indeed cut corporate taxes, the savings will help railroads immensely. While other industrials might use the excess cash to buy back shares or raise dividends, the railroads are more likely to reinvest, and that could be a boon to stock prices.
“If you cut corporate taxes in half, the market will take off,” says Nick Kaiser, chairman of Saturna Capital, which manages the Bronze-rated Amana Growth Investor (AMAGX). That’s a big reason rails are up 27% since the election, he says.