Cramer lists the winners and losers of the GOP tax overhaul

  • "Mad Money" host Jim Cramer found stocks that could be the biggest beneficiaries of the Republican tax plan.
  • Some stocks that haven't done well in 2017 stand to seriously benefit when the tax overhaul goes into effect, Cramer said.
  • At the same time, some of the market's top performers are falling out of favor as Wall Street embraces the new tax code.

CNBC's Jim Cramer has noticed Wall Streeters saying that certain companies "fit the profile" for success in 2018 and others don't.

"What exactly does it mean to 'fit the profile?' It means the company has to be a direct beneficiary of the new tax law and it needs to come from a cohort that's under-loved by Wall Street," the "Mad Money" host said on Wednesday.

Winners

Cramer started by looking at Nucor, a steel producer with a stock that has struggled through much of 2017, up only 7 percent for the year.

Last week, Nucor pre-announced that it would only earn between 50 and 55 cents a share in its fourth quarter, lowering its estimates for the third quarter in a row. But shares of Nucor only momentarily dipped on the news, and the stock proceeded to climb higher.

"Why? Because it fits the profile," Cramer said. "Yep, it's a company that can do much better if the economy accelerates [and] it pays a 31 percent effective tax rate, so it stands to make a lot more money under the new law," which would cut the corporate rate to 21 percent.

High-quality cyclical stocks like Nucor's make up Wall Street's most wanted going into 2018, so much so that Nucor could climb to $70 in the near future, Cramer predicted.

What else is on Wall Street's holiday shopping list? Consider the stock of FedEx. Unlike Nucor, FedEx has been doing well, as showcased by its Tuesday earnings report.

On Tuesday, FedEx's management upped its forecast beyond what analysts expected and said that the tax plan would directly improve the shipping giant's business.

"So Fedex does well under the tax bill and it benefits from a better global economy," Cramer said. "That makes it a total winner. No wonder the stock rallied 3.5 percent today to an all-time high."

The banks also stand to be huge beneficiaries under the new tax code, the "Mad Money" host said. Cramer's favorite was Citigroup, but he said investors could pick any major bank they want.

Banks benefit from a lower corporate tax rate and the gradual increase in short-term interest rates, as well as a small loophole in the new tax plan that has gone largely unnoticed.

With the new plan, "it's cheaper for international industrials to borrow money overseas and deduct the interest against gains in those countries, rather than deducting the interest here," Cramer explained. "It's terrific for banks with worldwide tentacles like a Citigroup or, say, a Goldman Sachs, which can act as international bank agents for domestic borrowers who want to take advantage of the better tax schemes overseas when it comes to debt."

Losers

Large international technology companies that have strong secular growth top the list of companies that don't fit Wall Street's predetermined profile, Cramer said.

Giants like Alphabet or Amazon that have billions of dollars overseas could repatriate their assets, but tech companies often need and use the cash for overseas projects, he said.

"[Money managers] want cyclicals that are going to have a much larger year-over-year earnings gain thanks to an accelerating economy and a big tax cut," Cramer said. "Alphabet, Amazon, and their fellow FANG travelers certainly aren't losers under the new tax regime and I sure wouldn't sell them, but they're far from the biggest winners."

Pharmaceutical companies also tend not to benefit hugely from tax overhauls like these, which could explain the recent losses in major global drug stocks, the "Mad Money" host said.

Final Thoughts

"You may feel like you've missed it. And I'm not going to say that you haven't let a bunch of trains go by, especially the tech trains. They've left the station without you," Cramer said. "Nevertheless, the bottom line is that there are still plenty of other stocks that 'fit the profile' and they're ready to make another, and I think maybe substantial, move. Now, I wish those stocks would come down and give us an even better entry point, but even here, I think they're still worth buying."

WATCH: Cramer on Republican tax plan's winners and losers

Disclosure: Cramer's charitable trust owns shares of Nucor, Citigroup and Alphabet.

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