Stock buybacks are generally considered a bullish signal on Wall Street. They announce management's belief that its stock is cheap, and that investing in itself will yield its best return on investment. Like dividends, buybacks also let companies return capital to shareholders.

How buybacks work
Done right, share repurchases will increase earnings per share, so long as profits remain steady or increase. A company with $1 million in earnings and 1 million shares outstanding will have EPS of $1. If it buys back 250,000 shares, leaving only 750,000 shares outstanding -- and total profits remain $1 million -- its new EPS will be $1.33, or $1 million divided by 750,000.

After finding companies that have announced stock buyback programs, we'll head over to Motley Fool CAPS to get some insight into what the investing community thinks the best prospects are. If companies announce buybacks, and CAPS' top investors endorse their future prospects, Fools should take notice.

Here's a list of some of the latest companies to announce share repurchase programs.


Buyback Announcement Date

Amount of Buyback

CAPS Rating

MEMC Electronic Materials (NYSE:WFR)


$500 million




$1 billion


Sun Microsystems (NASDAQ:SUNW)


$3 billion


Unilever (NYSE:UL)


131 million shares


Fifth Third Bancorp (NASDAQ:FITB)


30 million shares


Source: Company press releases; CAPS ratings courtesy of Motley Fool CAPS.

The CAPS advantage
Now we'll turn to CAPS, the Fool's collective intelligence service, and see what some of the best Foolish investors have to say about these companies.

While the tech sector is fairly represented this week, with Sun, NVIDIA, and semiconductor wafer maker MEMC all announcing buybacks, the most favored stock is British consumer goods manufacturer Unilever, which announced that it was repurchasing around 10% of its stock.

One-quarter of all the CAPS investors rating the maker of Vaseline, Slim Fast, Lipton tea, and Wishbone salad dressings are considered All-Stars, investors more accurate and more consistent than at least 85% of the 29,000 other players in the CAPS universe.

  • CAPS standout jnifer4 says the Motley Fool Income Investor recommendation "is a good company that sells goods which everyone needs and will still sell product even in a recession. They also boast a dividend which makes it a good company to hold onto in a portfolio for many years. The Unilever name has been building and growing and is growing up to (I really hope) be the on par with Johnson & Johnson someday in terms of household recognition but (at least currently) at a fraction of the cost."
  • Industry research and analyst firm Netscribes concurs, noting "Unilever is one of the world's leading suppliers of fast moving consumer goods across foods, home and personal product categories. ... Moreover, the "One Unilever" program, which includes increasing leverage of its scale and thereby creating a more competitive cost-structure that, should allow the company to rebalance its price-value equation and thus providing a tough time to discounters."

What's your take? Does a proliferation of everyday consumer products translate into a worthy investment? Are the bulls on target, or are they short-circuiting better investments in the tech industry?

Foolish fallout
Now it's time to add your voice. Motley Fool CAPS is a completely free, fun service where you can pit your intellect against thousands of your fellow investors. Click here to sign up today.

Unilever and Johnson & Johnson are recommendations of Motley Fool Income Investor, where a 30-day risk free trial subscription gives you the goods on all the market-beating recommendations. NVIDIA is a recommendation of Motley Fool Stock Advisor.

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