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10 Stocks Shrinking Shares

Stock buybacks are generally considered a bullish signal on Wall Street. They return capital to shareholders, while declaring management's belief that its own cheap shares are its best return on investment. As long as profits remain consistent, share repurchases can even increase earnings per share, by dividing the same amount of earnings among a smaller pool of shares outstanding.

Today, we'll draw up a list of companies that have announced stock buyback programs, then consult Motley Fool CAPS to see which of those companies the 82,000-strong investor community favors most. If CAPS' top investors endorse the prospects of companies announcing buybacks, Fools should take notice.

Here are some of the latest companies to announce buybacks:


Buyback Announcement Date

Amount of Buyback

CAPS Rating(out of 5)



$1 billion


CBRL Group




Potash Corp. of Saskatchewan (NYSE:POT)


15.82 million shares


F5 Networks (NASDAQ:FFIV)


$200 million


Avis Budget Group (NYSE:CAR)


$50 million


Xerox (NYSE:XRX)


$1 billion


Yum! Brands


$1.25 billion


Trimble Navigation


$250 million


Polaris Industries


3.5 million shares


Apogee Enterprises




Sources: Company press releases; Motley Fool CAPS.

Investors at CAPS seem fond of this group of companies, as most are rated at three stars or better. Yet it should be noted that just because a company has announced a buyback program doesn't mean it has to follow through. According to reports, Target (NYSE: TGT  ) , which announced its huge $10 billion buyback plan in November, has yet to buy a single share.

Easy credit policies of the past few years have partially fueled buybacks. Companies didn't mind borrowing big bucks to repurchase their shares even if they were trading at all-time highs. Sears Holdings (Nasdaq: SHLD  ) , for example, bought back shares when they were trading at $150 a share, on average. According to Standard & Poor's, there were $586 billion in buybacks last year among S&P 500 companies, with $138 billion in just the fourth quarter. Yet that figure was well below the record $172 billion in the third quarter. With credit policies tight, we may be seeing far fewer share repurchase programs in 2008.

Fertilizing portfolio profits
When investors think about mineral mining, they're more likely to consider companies that dig in the earth for gold, silver, and aluminum. Even if they know what potash is used for it certainly doesn't sound sexy enough to generate much interest. Even less exciting is thinking about mining for the stuff in the province of Saskatchewan.

But when there's a company that seems to have cornered the market on the fertilizer ingredient and demand continues to outstrip supply, investors would be wise to sit up and take notice.

That's why some smart people have been looking a lot more closely at Potash Corp. of Saskatchewan, a company that not only produces the most potash but also holds around 75% of the world's excess capacity. Last year's record results make Potash a significant force in fertilizer. It's also what fuels the interest of CAPS players like GS751, who notes Potash's dominant market position in this pitch excerpt from yesterday.

They operate in very tough industry ... They control 75% of the [world's] potash production. This gives them the ability to manage the global supply and demand. I expect their revenue to increase due to capacity expansions and the pricing power coming from tight global markets for all of its products.

The complete analysis can be read by clicking here.

Top-rated CAPS All-Star Sinchiruna, with a 99.74 player rating, said last November, "In the coming depression, the inflation in food prices will carry over into prices for fertilizer, which should help the world's leading producer of potash."

Foolish fallout
You've heard from your fellow investors -- now it's your turn. Motley Fool CAPS is a completely free, fun service where more than 82,000 investors have their say every day. Sign up today, and share your best pitch for why your favorite stock will beat or lag the market.

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