10 Stocks Shrinking Shares

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Wall Street generally considers stock buybacks a bullish signal. Buybacks return capital to shareholders and declare 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 and then consult Motley Fool CAPS to see which of those companies 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)
Ameriprise Financial	4/22/08	$1.5 billion	***
Host Hotels & Resorts	4/23/08	$500 million	***
Whirlpool	4/24/08	$500 million	**
Zimmer Holdings	4/24/08	$1.25 billion	*****
Varian Semiconductor	4/24/08	$800 million	*****
Hansen Natural (Nasdaq: HANS)	4/25/08	$200 million	****
Progenics Pharmaceuticals (Nasdaq: PGNX)	4/25/08	$15 million	***
Foundry Networks (Nasdaq: FDRY)	4/25/08	$100 million	****
Sturm, Ruger (NYSE: RGR)	4/25/08	$10 million	***
Orbital Sciences (NYSE: ORB)	4/25/08	$50 million	***

Sources: Company press releases; Motley Fool CAPS.

Investors at CAPS seem to approve of this group of companies announcing buyback programs, since most have received three-star or better ratings. Yet just because a company has announced a buyback program, that doesn't mean it has to see the buyback through. A company is not obligated to repurchase shares merely for announcing its plans to do so.

The easy credit policies of the past few years have helped fuel buybacks. 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.

Still a monster opportunity
Despite higher costs that sapped some of the energy out of its beverage margins, Hansen Natural has been ramping up volume to take on Red Bull as the motivating drink of choice. With distribution partners such as Anheuser-Busch (NYSE: BUD) and PepsiCo (NYSE: PEP), it should not have to worry about getting its beverages to market. Yet it can't be ignored that Hansen may face some cash constraints in the immediate future, because it has some $227 million that was once liquid but is now locked down in auction rate securities.

Investors such as CAPS player rknapton find the energy-drink business something to get charged up about:

The energy drink market is growing rapidly. Goldman Sachs and Mintel Research predict it will be a $10 billion market by 2010. ... The leader in market share is [Red Bull] with 43%, but is privately held. The next largest market share leader is the Monster Energy drink brand. It ... accounts for 17% of the market sales. Hansen's owns the Monster Brand and ... [it] is Hansen's primary revenue source.

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.