GOLDMAN SACHS: These 16 stocks are poised to maximize tax savings and crush the market in 2018

Reuters / John Gress

• Wide-reaching corporate tax cuts have stock investors wondering which companies will benefit most.
• Goldman Sachs has singled out the 16 companies that offer the most reinvestment growth, a characteristic of companies that have historically outperformed the market.

How does an investor decide which companies are poised to benefit most from sweeping tax cuts that benefit most everyone? Listen to Goldman Sachs, of course.

The firm has developed an index of stocks called the High Growth Investment Ratio Basket, which is designed to include companies whose share prices are most likely to get a boost from tax reform, given their past use of excess capital.

Goldman's basket includes not just the companies who have most heavily reinvested money into capital expenditures and research & development, but also those set to generate the highest return on it.

For context, the median stock in the index has reinvested 81% of its trailing three years of cash flow from operations, compared with just 13% for the average S&P 500 company, according to Goldman. The firm also forecasts that basket members will offer 18% cash return on capital invested, compared to just 12% for the broader benchmark.

Get the latest Goldman Sachs stock price here.