It’s doesn’t take much to see that 2013 is going to bring some changes that will require individual and institutional investors alike to rethink their strategies. Recently, I offered my take on what will happen to dividends under Obama, and I mentioned that American-based blue chips will probably deploy their cash through stock buybacks rather than risk having more of it lost to taxes.
And already we’re seeing this go into effect. In just the past few days we’ve seen a handful of market bellwethers announce hefty share repurchase programs. So today I want to explain exactly why this is great news for investors and then point you to some of companies engaged in stock buybacks.
First, I consider stock buybacks a plus for investors, and here’s why:
- It’s a sign that a company considers its shares good bargain.
- Having fewer shares on the market reduces share price fluctuations.
- Stock buybacks increase earnings per share—helping a company beat analyst estimates when they announce quarterly results.
- For dividend-paying companies, buying back stock means that there are fewer shares that require a quarterly dividend payment.
With all of these benefits, it’s no wonder that many companies are relentlessly buying back their stock. Now, finding out which companies are engaged in share repurchase programs requires some research, so today I’ve compiled a list of the biggest stock buyback launches that you should keep on your radar. (Of course, while a stock buyback program is a good sign for a company, it’s not a green light for a buy recommendation, so I’ve added a column with my Portfolio Grader recommendation for each stock.)
|Company||Ticker||Stock Buyback||My Take|
|Coca-Cola Co.||KO||Coca-Cola launched a new $18.9 billion share repurchase program, in addition to its ongoing $2.5 billion to $3 billion plan.||Hold|
|GameStop Corp.||GME||GameStop announced a new $500 million share repurchase program.||Sell|
|IBM Corp.||IBM||IBM increased its stock buyback fund by 75% to $11.7 billion; it plans to authorize more backbacks in April.||Hold|
|JPMorgan Chase||JPM||JPMorgan plans to buy back up to $3 billion of its stock in Q1 2013.||Hold|
|Kroger Co.||KR||Kroger launched a $500 million share purchase program.||Hold|
|Monster Beverage Corp.||MNST||Monster is repurchasing an additional $250 million of its shares, adding to its ongoing $500 million plan.||Hold|
|NetApp Inc.||NTAP||NetApp expanded its ongoing stock buyback progam by $1.5 billion.||Strong Sell|
|O’Reilly Automotive Inc.||ORLY||O’Reilly authorized a $500 million addition to its ongoing program, raising the total to $3 billion.||Buy|
|Procter & Gamble||PG||P&G plans to increase its stock buyback plan from $4 billion to $6 billion.||Buy|
|Ross Stores Inc.||ROST||Ross plans to buy back an additional $116 million in stock next quarter, completing its ongoing $900 million program.||Buy|
|Visa Inc.||V||Visa announced a new $1.5 billion stock buyback program, to be completed in October 2013.||Buy|
|Wells Fargo & Co.||WFC||Wells Fargo increased its ongoing stock buyback program by $6.9 billion.||Buy|
|Xerox Corp.||XRX||Xerox plans to expand stock buybacks by $1 billion in 2013.||Sell|
|Zumiez Inc.||ZUMZ||Zumiez recently approved a $22 million stock buyback program through February 2014.||Hold|
That’s all I have for you today—I’ll be in touch tomorrow with a briefing of the latest market moving economic news.