These 2 Stocks Are Bill Stone's Pure Plays On Tax Reform

President Trump's tax reform agenda could still be passed before the end of 2017 despite ongoing turmoil in Washington D.C. 

The Expert

Bill Stone, chief investment strategist at PNC Asset Management Group.

The Strategy

Pfizer Inc. PFE and Cisco Systems, Inc. CSCO are two companies that stand to see outsized benefits from tax reform, Stone said. 

The Thesis

The tax reform plan being pushed by Congressional Republicans is expected to pass before 2018, Stone said during a recent CNBC "Trading Nation" segment. One of the most notable aspects of the legislation for corporations would be the repatriation clause on foreign cash — levying a smaller tax rate on companies looking to bring cash held overseas back to America.

In Pfizer's case, the pharmaceutical giant could use its repatriated cash to acquire the rights to new drugs, Stone said. This would merely add to the bullish case for owning Pfizer after the company not only reported an earnings beat-and-raise quarter, but is looking to spin off its consumer health division and offers a "pretty high" dividend yield, he said. 

Cisco would likely emerge a big winner from tax reform, Stone said. In this case, Cisco is positioned to benefit from the incremental spending. But Cisco will likely use its own tax savings for a "lot of stock buybacks" and boost its already high 3 percent dividend yield, Stone said. 

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