J.P. Morgans Thomas Lee Discusses Repatriation And Who Benefits

J.P. Morgan Chase & Co.'s Thomas Lee is out with a research report on the idea of repatriation, and the stimulative effects it would have. In a note to clients, J.P. Morgan writes, "Discussion about a tax repatriation holiday is gaining momentum in Congress. Dane Mott, J.P. Morgan's Accounting Analyst, estimates foreign undistributed earnings are at least $1.4T and growing double digits annually. In 2004, corporates repatriated an est $362B, and we expect a much larger figure today (larger share of profits from overseas today, Figure 3). In our view, this repatriation carries a bigger punch than QE--given use of proceeds likely directly benefits equities or US economy." Lee goes on to say in the report, "12 cos with higher FCF yield, investment grade. We wanted to provide a list of cos that are likely to benefit from a repatriation opportunity. The following criteria were used: 1) Rated OW by JPM, 2) Undistributed Foreign Earnings as a % of Market Cap >20%, 3) Investment Grade, 4) FCF Yield > 5%. The tickers are: AA, ALV, ADI, MRK, WU, PFE, AMGN, GE, DD, HNZ, ABT, and TUP."