10 Stocks Shrinking Shares

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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 firms the 100,000-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 share repurchase programs.

Company	Buyback Announcement Date	Amount of Buyback	CAPS Rating (out of 5)
TASER (Nasdaq: TASR)	4/28/2008	$12.5 million	***
Omnicell (Nasdaq: OMCL)	4/28/2008	$50 million	***
Sciele Pharma (Nasdaq: SCRX)	4/28/2008	$100 million	*****
Sanderson Farms	4/28/2008	225,000 shares	*****
Microtune (Nasdaq: TUNE)	4/29/2008	$10 million	****
Align Technology (Nasdaq: ALGN)	4/29/2008	$50 million	**
Bottomline	4/29/2008	$10 million	**
W.W. Grainger (NYSE: GWW)	4/30/2008	10 million shares	****
BorgWarner	4/30/2008	5 million shares	****
Union Pacific (NYSE: UNP)	5/1/2008	20 million shares	*****

Sources: Company press releases; Motley Fool CAPS.

Investors at CAPS seem to approve of these companies, since most have received three-star-or-better ratings. But just because a company has announced a buyback program doesn't mean it's obligated to follow through on it.

Buybacks have been partially fueled by the easy credit policies of the past few years. Companies didn't mind borrowing big bucks to repurchase their shares, even if they were trading at all-time highs. According to Dealogic, there were $538 billion in buybacks last year among S&P 500 companies, with $122 billion in the fourth quarter alone. Yet announced buybacks in the first quarter of 2008 have slumped to just $76 billion. With credit policies tight, we may see far fewer share-repurchase programs in 2008, or more companies issuing shares to raise money.

The economy on the rebound
"What's good for General Motors is good for the U.S.A.," the old saying went. But with GM largely considered a financial basket case these days, no longer likely to power any economic booms, we may have to sub in Grainger's name instead. Offering a breadth of products from motors and cleaning materials to lighting and building maintenance supplies, W.W. Grainger is often viewed as a proxy for the U.S. economy.

CAPS player jbuell217 notes that repairs are always necessary:

This company supplies repair and maintenance parts to industrial and commerical facilities. I work for a privately held competitor. This sector is very good at weathering recession. You always have to fix the elevators, regardless of where the stock market is.

Similarly, another investor, InvalidUserID, finds that the broad array of products is attractive to a wide variety of businesses:

The big Grainger machine keeps expanding both globally (China & Mexico) as well as domestically by adding locations and upgrading existing ones. Broad product offering to a broad range of customers such as contractors, local governments and other businesses.

Strong dividend grower to boot, may take a while to get back to the $100 range but should get there sooner than later.

Speaking of dividends, the company also just announced a 14% increase in its dividend, its 37th consecutive year of boosting such payments. Only 20 companies in the S&P 500 can claim a similar record.

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 100,000 investors have their say every day. Sign up for CAPS today, and share your best pitch for why your favorite stock will beat or lag the market.

TASER is a Motley Fool Rule Breakers recommendation. BorgWarner was selected by Stock Advisor. A 30-day free trial of any of the Fool's investment services will let you shrink the universe of stocks to a manageable size.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.