7 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 buyback programs, then consult Motley Fool CAPS to see which of those companies the community of 110,000 investors 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 repurchase programs.

Company

Buyback Announcement Date

Amount of Buyback

CAPS Rating (5 max)

Daimler (NYSE: DAI  )

June 17

$9.3 billion

*

Wind River Systems (Nasdaq: WIND  )

June 17

$50 million

***

Repligen (Nasdaq: RGEN  )

June 18

1.2 million shares

****

Stewart Enterprises (Nasdaq: STEI  )

June 19

$25 million

*****

Western Union (NYSE: WU  )

June 20

$1 billion

*****

Parkvale Financial

June 20

274,000 shares

NR

HCC Insurance

June 20

$100 million

***

Sources: Company press releases; Motley Fool CAPS. NR=not rated.

Investors at CAPS appreciate this group of companies, because most have three-star or better ratings. Yet it should be noted that just because a company has announced a buyback program, doesn't mean it has to buy any shares.

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 their highest prices ever. According to Dealogic, there were $538 billion in buybacks among S&P 500 companies last year, with $138 billion in the fourth quarter alone. Yet announced buybacks in the first quarter of 2008 slumped to just $76 billion. With credit policies tight, we may see far fewer repurchase programs this year, or more companies issuing shares to raise money.

Just in a rut?
What have you done for me lately? That's the kind of rationale that's behind a company's patent moat, which is usually only good until the next big thing comes along to supplant the current technology. Yet while they exist, they can provide a wide competitive advantage. Repligen, which develops therapies to treat the central nervous system, has been pressing its advantage with a series of successful patent defenses against ImClone (Nasdaq: IMCL  ) and Bristol-Myers Squibb (NYSE: BMY  ) . The Food and Drug Administration recently awarded it fast-track authority for its synthetic gastrointestinal hormone secretin. The stock has fallen lately, perhaps on concerns that revenue in the latest quarter was about 11% lower while expenses were higher and the company's net loss widened.

CAPS investors like maxumtrades believe Repligen remains financially secure while holding promise for the future.

[Repligen] has solid [financials] and is currently climbing at a slow rate. Good [pharmaceutical]
This stock has a bright future and is gaining support from the 10 [-day moving average].

Another to take flight
In the quest to find the next alternative energy company, it's probably not surprising that a number of investors confuse Wind River Systems with a wind power technology company. However, it is really a software platform developer. It has stemmed the hemorrhaging by posting profits ahead of analyst expectations, and CAPS investor STORMSTOCKER also believes it will be profitable next year as well.

STOPPED THE BLEEDING FOR THE MOST PART, AND GETTING A HANDLE ON THEIR MONEY/CASH FLOW......THIS IS HI TECH STUFF THAT RUNS COMPUTER-SOFTWARE-DEVICES,


THEIR " KITE" HAS BEEN FLYING SIDEWAYS FOR ABOUT 3 YEARS NOW, WITH A FEW DIPS AND VALLEYS, ALONG THE WAY, NOW WITH THEIR NEW EARNINGS/SALES "WIND" PUSHING THE COMPANY ALONG, THIS SHOULD ELEVATE THE STOCK HIGHER....UP UP AND AWAY ON THE...........WIND..!!??

Foolish fallout
You've heard from your fellow investors -- now it's your turn. Motley Fool CAPS is a completely free, fun service where 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.

Western Union is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

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


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