It doesn’t take much to see that the rest of 2013 is going to bring some changes that will require individual and institutional investors alike to rethink their strategies. And already we’re seeing this go into effect; recently, 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. (And it’s no wonder that Carl Icahn keeps pushing Apple Inc. (AAPL) to increase its stock buyback program.)
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.)
|Ticker||Company||Stock Buyback||My Take|
|ABC||AmerisourceBergen Corp.||Recently, the company’s board approved $750 million in stock buybacks–that’s on top of the $450 million or so it has left on its existing program.||Strong Buy|
|HAL||Halliburton Co.||Just days ago, Halliburton announced that it is buying back 68 million shares of its stock, amounting to about $3.3 billion.||Hold|
|MO||Altria Group||Last week, Altria authorized an additional $700 million to its existing program, bringing the total value to $1 billion.||Sell|
|SYY||Sysco||Recently, Sysco revealed a new 20 million share repurchase program. This is the company’s 18th stock buyback program in twenty years.||Sell|
|V||Visa Inc.||Last month, Visa announced that it is launching another $1.5 billion stock buyback program||Strong Buy|
|URBN||Urban Outfitters Inc.||Today, Urban Outfitters announced a new 10 million share repurchase program.||Sell|
What can we take away from this? Stock buybacks can be a powerful indicator for investors, but it takes more than a hefty share repurchase program to pass my screening tool.