Back to top

The Zacks Analyst Blog Highlights: EventShares U.S. Tax Reform, SPDR S&P Regional Banking, iShares Russell 2000 Growth, iShares U.S. Dividend and Buyback and First Trust Consumer Discretionary AlphaDEX

Read MoreHide Full Article

For Immediate Release

Chicago, IL – Dec 5, 2017 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include EventShares U.S. Tax Reform ETF (TAXR - Free Report) , SPDR S&P Regional Banking ETF (KRE - Free Report) , iShares Russell 2000 Growth ETF (IWO - Free Report) , iShares U.S. Dividend and Buyback ETF (DIVB - Free Report) and First Trust Consumer Discretionary AlphaDEX Fund (FXD - Free Report) .

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Senate Passes Tax Bill: 5 ETFs to Buy Now

Trump scored a first major legislative win after more than 10 months in office following the Senate’s approval of the biggest U.S. tax overhaul in three decades “Tax Cuts and Jobs Act,” with a 51-49 vote. The move has brought Republicans closer to finalizing the $1.5 trillion tax reform by the end of the year.

The Senate bill differs from the tax bill passed by the House in mid-November on various fronts. We have highlighted some of the major differences (read: House Passes Tax Bill: Likely ETF Winners & Losers):

1.    Both bills reduce the corporate tax rate from 35% to 20% while the House cuts it immediately, the Senate delays the cut till 2019.

2.    The House bill shrinks the current income tax brackets from seven to four: 12%, 25%, 35% and 39.6% while the Senate version keeps the current seven tax bracket: 10%, 12%, 22%, 24%, 32%, 35%, and lowers the top rate to 38.5%.

3.    The Senate bill repeals Obamacare’s individual mandate, which will leave 13 million lesser insured over the next decade. On the other hand, the House bill does not touch this aspect.

4.    The House bill repeals the current medical expense deduction while the Senate aims to keep the medical expense deduction in place with a lower floor of 7.5% for tax years 2017 and 2018.

5.    The House bill also has a provision to repeal deductions for student loans and other education expenses as well as estate tax. The Senate bill on the other hand keeps education deductions intact while increases the estate tax exemption to above $10 million each year after next year, and eliminates it after six years.

6.    Apart from these, there are differences in standard deduction plans, mortgage interest deduction, child tax credit, and other items.  

However, both are likely to negotiate to reconcile their respective bills before the signature from the president, which is expected by Christmas. The massive tax cuts will create an economic surge, boosting job growth in manufacturing and other sectors. Additionally, a lower tax rate would result in better corporate earnings and strong buyback activities (read: Q3 Earnings Effect: 5 Hottest ETF Charts).

How to Play?

Given this, investors seek to cash in on the opportunity with ETFs that are set to gain the most on tax reforms. Below, we have highlighted some of these funds.

EventShares U.S. Tax Reform ETF

This ETF is actively managed and seeks to provide exposure to investments that are impacted by the reform of the U.S. Tax Code system. It is home to 35 stocks and has amassed $2 million in its asset base in less than two months. The fund charges 85 bps in fees and expenses and trades in a lower volume of 12,000 shares.

SPDR S&P Regional Banking ETF

Since banks have higher tax rates, reduced corporate rates would lead to more profits. In addition, the repatriation of hundreds of billions of dollars in cash could find a home in banks. The tax reform may also cause a rise in interest rates that would expand net margins and bolster banks’ profits. Given the tailwinds, the ultra-popular bank ETF could be a big winner. It has amassed $4.6 billion in its asset base and charges 35 bps in annual fees. The ETF has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Powell to Lead Fed: Best ETF Strategies).

iShares Russell 2000 Growth ETF

Small companies pay huge taxes in America and a tax cut could be a big boon to these companies. While there are several options in this space that would gain from the proposal, IWO seems to be the most exciting choice as it offers exposure to companies whose earnings are expected to grow at an above-average rate relative to the market. It charges 0.24% in expense ratio and has $9.5 billion in AUM. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Top-Ranked ETFs That Crushed the Russell 2000 Post Election).

iShares U.S. Dividend and Buyback ETF

Lower corporate taxes would boost companies’ profitability leading to increased buybacks and fatty dividends. As a result, the new DIVB looks excellent. The fund invest in U.S. companies that return capital to shareholders by paying dividends or buying back their stock. It holds a diversified portfolio of 383 stocks and charges 25 bps in fees per year. The ETF has accumulated a decent $2.6 million in AUM within a month and trades in a paltry volume of more than 3,000 shares a day.

First Trust Consumer Discretionary AlphaDEX Fund

The consumer discretionary sector will benefit from a reflation rally, as tax reforms will help businesses and consumers, boosting discretionary spending. FXD could be a compelling choice with AUM of about $475.3 million and expense ratio of 0.63%. The fund trades in average daily volume of 91,000 shares and has a Zacks ETF Rank #2 with a Medium risk outlook.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.

Follow us on Twitter:

Join us on Facebook:

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

More from Zacks Press Releases

You May Like