Stock buybacks are generally considered a bullish signal on Wall Street. They often announce management's belief that its stock is cheap and that its own shares will provide 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 stay at least at the same level. A company with $1 million in earnings and 1 million shares outstanding will have EPS of $1. Now, if it buys back 250,000 shares, leaving only 750,000 shares outstanding -- and total profits remain $1 million -- its new EPS would be $1.33, or $1 million divided by 750,000.

We're seeking companies that have announced stock buyback programs. Then we'll head over to Motley Fool CAPS to get some insight into the 65,000-strong investor community's preferred picks. If companies announce stock buybacks, and CAPS' top investors endorse their future prospects, Fools should take notice.

Here are some of the latest companies to announce share repurchase programs.


Buyback Announcement Date

Amount of Buyback

CAPS Rating (out of 5)

Monster Worldwide (NASDAQ:MNST)


$250 million


Exelon (NYSE:EXC)


$1.25 billion


iMergent (NYSE:IIG)


$50 million


Cameco (NYSE:CCJ)


$750 million


Nucor (NYSE:NUE)


30 million shares


Sources: Company press releases; Motley Fool CAPS.

The CAPS advantage
Investors at CAPS seem to have pretty mixed opinions about this group of companies announcing buyback programs, with only two of the five companies earning four or five stars. Only iMergent, though, has earned a one-star rating, as investors avoid this new sin stock and its history of lawsuits and investigations into sales and business practices.

Most of them are buying back sizable chunks of stock, however; even troubled iMergent's new $50 million program would total more than 20% of its outstanding shares if they were bought at today's price. Perhaps coupled with its chairman resigning, this company could turn around, but there is an exceptionally large legal overhang here that makes any movement to the upside seem doubtful anytime soon.

It was just last week that another steelmaker, Steel Dynamics (NASDAQ:STLD), announced a buyback program; this was quickly followed by Nucor's statement that it, too, would be buying back stock. The steel industry seems to be saying that despite the recent slowdown in demand, particularly after such a go-go period, stocks in this sector are getting cheap. Top-rated CAPS All-Star KenN513 notes that the nation's infrastructure is going to need to be rebuilt, and such a project will require steel.

This is a long term buy and hold. The disaster in Minnesota underscores the condition of America's infrastructure. Infrastructure improvements require old-fashioned steel and concrete. Nucor is nimble and effective in the structural steel market. Look for earnings surprises from Nucor as we are forced to improve our infrastruture.

Nucor's business generates a lot of cash, which attracts a lot of investors like All-Star SoImmature. Since 2005, the company has returned about $3 billion of that cash to shareholders. SoImmature notes, "This company practically mints cash. I wouldn't reconsider this pick until they cancel their quarterly special dividend, and even then, Nucor is probably a keeper."

Top-rated Cameco -- which mines and produces uranium for use in nuclear reactors -- is an investor favorite, even as uranium prices have dropped and one of the investments it made in asset-backed commercial paper failed to repay money owed to it because of the crisis in the credit markets. That hasn't dissuaded CAPS investors like Punie from feeling positive about the long-term health of Cameco.

Cameco is a Canadian play and a world leader in the Uranium market. There are many Uranium plants being built around the world and Cameco wants to be the supplier. With a set back flooding of one of their mine, Cameco still has the capital to overcome this adverse incident. Cameco has just announce a buy back of shares today, Oh boy.

It's that future potential for nuclear power that has CAPS All-Star Radioman101, well, glowing about Cameco.

Want to reduce greenhouse gases? Can you say 'Yellow Cake'. CCJ is the world's largest producer of uranium. They account for 20% of the world's uranium production. CCJ just had a blow out quarter (7/07). They also process fuel for nuclear reactors. With all the concern about climate change, nuclear power is becoming an attractive alternative to fossil fuels for generating electricity. A nuclear power plant has no noxious air emissions. Nuclear power is making a come back. CCJ is best of breed. And if that doesn't convince you, they also mine gold through their controlling interest in Centerra Gold.

Foolish fallout
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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.