A highlight of every earnings season is the announcement of share buybacks. A share buyback is a corporate finance action in which a company repurchases an amount of the shares available in the market.
The impact of a share buyback is generally bullish based on supply and demand. That is, when the number of a company's outstanding shares available goes down, the company's earnings per share (EPS) will increase. As earnings increase, investors may buy the stock in anticipation of it moving higher.
Should you invest in a company that issues a stock buyback? Generally speaking, a stock buyback shouldn't be the only reason you buy any stock. Ideally, you want to see a company offering a buyback because they have excess cash after appropriate capital expenditures (capex) to grow the business. You also want a company with a history of delivering earnings and stock price growth that outpaces the market average.
In this special presentation, we highlight seven stocks investors should consider buying after the company announces stock buybacks.
Click the "Continue to Slide #1" button to view the first company.
