Top 4 Stocks Dominating Buybacks in 2024: Investment Opportunities

Stock buybacks, also called stock buybacks, are important drivers of shareholder value, and this is one reason because Marketbeat tracks data. As the name suggests, a buyback occurs when a company buys back its shares from the market.

Buybacks are a form of capital return that can offset the dilutive effects of stock-based compensation and can even reduce the number of shares. Reducing the number of shares is essential because it reduces the number of times a company is divided among shareholders and provides leverage for share prices.

If Company Fewer shares also help spur earnings growth on a per-share basis and improves dividend health if a distribution is paid; fewer shares means fewer total distributions paid. More importantly, when it comes to dividend stocks, a smaller number of shares helps distribution growth prospects by freeing up cash flows that can be channeled into growing distributions for the remaining shares, a significant benefit to share prices.

Let’s take a look at the top four companies tracked by Marketbeat that have issued stock repurchase authorizations this year.

Adobe takes advantage of share buybacks: shares are near long-term lows

by Adobe Inc NASDAQ: ADBE stock prices are near long-term lows and levels where the company could step in to support the market. Adobe tops the list of recent buyback announcements, having issued an authorization for $25 billion or 10% of market capitalization at the time of release. The percentage relative to market capitalization has increased significantly since then, suggesting a growing opportunity for investors.

The question is whether Adobe’s buybacks will move the needle, and the answer is yes. The company leans toward stock-based compensation, but has reduced its share count by 0.85% over the last year. This is not a large figure, but it is accretive to shareholders and supports price action. Analysts also support the price action. The latest earnings release left a little to be desired, but it produced several reiterated ratings and price targets. The consensus is a moderate buy with an upside of at least 30%.

HCA Healthcare makes healthy share buybacks

While HCA Healthcare NYSE:HCA it doesn’t pay large dividends, is experiencing healthy growth, allowing for significant share buybacks, and is expected to continue to deliver strong capital returns this year. The company ranks second with a recent $6 billion clearance, equivalent to 7.5% of market capitalization when announced. The dividend is worth about 0.85%, with shares near all-time highs, and investors could expect to see the share count reduced significantly this year because it fell 5% last year. Analysts rate this stock a Moderate Buy and have revised their targets higher. The consensus assumes a fair value for the stock at current prices, but it is up 17% over the past year and is rising ahead of the first-quarter report.

FedEx issues stock repurchase authorization

As tepid as the outlook for freight and shipping is, analysts continue to raise their price targets for FedEx Corp. New York Stock Exchange: FDX. This is partly due to cash flow and capital returns, which remain robust. In the latest report, the company reduced its average share count by more than 1% and authorized a new $5 billion share repurchase plan, equivalent to 7.5% of market capitalization. FedEx also pays a dividend worth nearly 2%, with stock prices near multi-year highs. Analysts rate FedEx at Moderate Buy and see a gain of nearly 15% for trading at record levels.

Marvell Technology adds $3 billion to its buyback plan

Marvell technology NASDAQ: MRVL has added $3 billion to its stock repurchase plan, worth nearly 5% of the tech stock’s market capitalization. This is good news for investors, but it’s not the tailwind it could be. Buybacks have not offset stock-based compensation over the past year, boosting the stock count. However, analysts rate the stock a Moderate Buy and see it advancing 20% ​​from the consensus estimate. The consensus is trending upward and could lead the market to a new all-time high by the end of the year. Analysts see AI driving the business and an opportunity for Marvell to gain market share and post huge earnings.

Before you consider Adobe, you’ll want to hear it out.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Adobe wasn’t on the list.

While Adobe currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here