UBS: These 15 companies will benefit the most as Americans start paying less taxes next month

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Americans should start to see the impact of the Republican tax law next month. The Internal Revenue Service has directed employers to update their income-tax withholdings to reflect the new law by February 15.

UBS thinks that certain parts of the economy will disproportionately benefit from consumers’ bigger paychecks.

“We find that lodging, entertainment, housing, other transport (i.e. air) should benefit most, with incremental growth of ~3% above prior baseline levels, followed by alcohol and new cars,” said Keith Parker, the head of US equity strategy at UBS, in a note on Thursday. 

Based on new guidance from the Internal Revenue Service, UBS estimates that the monthly pay increases would range from $ 86 for a couple earning $ 50,000, to $ 1,456 for a couple earning $ 500,000. 

The bank’s consumer analysts picked 15 stocks they see as the biggest beneficiaries from higher disposable incomes.

SEE ALSO: Americans are about to see tax cuts in their paychecks — here’s what they’re likely to do with the extra cash

Home Depot

Ticker: HD

Thesis: “Building materials has been gaining wallet share for the last 5 years, which should be aided by greater disposable income.”

 

Lowe’s

Ticker: LOW

Thesis: “Building materials has been gaining wallet share for the last 5 years, which should be aided by greater disposable income.”

 

Dollar Tree

Ticker: DLTR

Thesis: “Dollar stores have most exposure to the low end consumer, who should have the highest marginal propensity to spend.”

 

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