Goldman Sachs analysts have rebalanced their “repurchase basket” as repurchase growth in 2024 is expected to be 13%.
According to a US Weekly Kickstart report, cash spending in the S&P 500 Index (SP500) grew 4% to $3.4 trillion last year. Furthermore, overall growth was limited by a 13% decline. in repurchase activity, “one of the most volatile uses of cash,” analysts said.
S&P 500 (SP500) cash spending was also limited by EPS growth to just 1% as companies feared a recession.
However, capital and R&D spending rose 10%, dividends rose 4%, while cash mergers and acquisitions spending grew 34%, analyst David J. Kostin reported .
“Annual changes mask shifting priorities on a quarterly basis year after year,” he wrote. “After growth of 13% in the first half of 2023, capital expenditures grew only 3% in the second half of 2023. In contrast, S&P 500 (SP500) stock buybacks fell by more than 20% in the first half of 2023, they fell 8% in the third quarter of 2023, but grew 5% in the fourth quarter of 2023.”
He explained that EPS growth is the most significant driver of buyback growth, so a reacceleration of EPS growth, particularly across sectors such as technology (XLK) and communications (XLC) would drive a rebound in buybacks.
Goldman data suggests activity is 50% above 2023 levels, with growth benefiting from easier year-on-year comparisons, analysts said. “However, elevated valuations, soaring interest rates and the 1% excise tax on repurchases will likely weigh on margin repurchase activity.”
These are the constituents of Goldman’s buyback basket (data as of April 18):
Communications Services (XLC)
- Fox Corp. (FOXA) – Trailing 12 Month Yield Repurchase: 12%
- Meta Platforms (META) – Last 12 Month Yield Repurchase: 9%
- T-Mobile US (TMUS) – Trailing 12 Month Yield Repurchase: 8%
- Comcast Corp. (CMCSA) – Trailing 12-Month Yield Repurchase: 8%
- Alphabet Inc. (GOOGL) – Repurchase Trailing 12 Month Yield: 6%
Discretionary Consumption (XLY)
- General Motors (GM) – Trailing 12 Month Yield Repurchase: 24%
- MGM Resorts International (MGM) – Trailing 12 Month Yield Repurchase: 18%
- Expedia Group Inc. (EXPE) – Repurchase Trailing 12 Month Return: 16%
- Booking Holdings (BKNG) – Repurchase Trailing 12 Month Return: 14%
- PulteGroup Inc. (PHM) – Repurchase Trailing 12 Month Yield: 10%
Consumer Staples (XLP)
- Archer-Daniels-Midland (ADM) – Repurchase trailing 12 month yield: 5%
- JM Smucker (SJM) – Repurchase Trailing 12 Month Yield: 4%
- Bunge Global SA (BG) – Repurchase performance of the last 12 months: 4%
Energy (XLE)
- Marathon Petroleum (MPC) – Trailing 12 Month Yield Repurchase: 22%
- Valero Energy Corp. (VLO) – Trailing 12 Month Yield Repurchase: 11%
Financial Data (XLF)
- State Street Corp. (STT) – Trailing 12-Month Repurchase Yield: 14%
- Wells Fargo & Co. (WFC) – Trailing 12 Month Yield Repurchase: 9%
- Bank of New York Mellon (BK) – Repurchase Trailing 12 Month Yield: 8%
- Synchrony Financial (SYF) – Repurchase Trailing 12 Month Yield: 8%
- Fiserv Inc. (FI) – Trailing 12 Month Yield Repurchase: 8%
- Discover Financial Services (DFS) – Trailing 12 Month Yield Repurchase: 7%
- Citigroup Inc. (C) – Trailing 12 Month Yield Repurchase: 7%
Healthcare (XLV)
- Cardinal Health (CAH) – Trailing 12 Month Return Repurchase: 8%
- Hologic Inc. (HOLX) – Trailing 12 Month Yield Repurchase: 6%
- HCA Healthcare Inc. (HCA) – Trailing 12 Month Yield Repurchase: 6%
- Universal Health Services (UHS) – Repurchase trailing 12 month performance: 6%
- Laboratory of America (LH) – Repurchase of trailing 12 month yield: 5%
- McKesson Corp. (MCK) – Trailing 12 Month Yield Repurchase: 5%
Industrial (XLI)
- Builders FirstSource (BLDR) – Trailing 12-Month Yield Repurchase: 21%
- Verisk Analytics (VRSK) – Trailing 12 Month Return Repurchase: 10%
- Expeditors International (EXPD) – Repurchase Trailing 12 Month Yield: 9%
- RTX Corp. (RTX) – Repurchase Trailing 12 Month Yield: 9%
Information Technology (XLK)
- Jabil Inc. (JBL) – Repurchase Trailing 12 Month Yield: 9%
- NetApp Inc. (NTAP) – Trailing 12 Month Yield Repurchase: 8%
- Broadcom Inc. (AVGO) – Repurchase Trailing 12 Month Yield: 6%
- F5 Inc. (FFIV) – Repurchase Trailing 12 Month Return: 5%
- Akamai Technologies (AKAM) – Repurchase Trailing 12 Month Yield: 5%
- Qorvo Inc. (QRVO) – Trailing 12 Month Yield Repurchase: 5%
- Lam Research Corp. (LRCX) – Trailing 12 Month Yield Repurchase: 5%
- Super Micro Computer (SMCI) – Repurchase of the past 12 months’ return: 5%
- Salesforce Inc. (CRM) – Trailing 12 Month Return Repurchase: 4%
- Fortinet Inc. (FTNT) – Trailing 12 Month Yield Repurchase: 4%
- VeriSign Inc. (VRSN) – Trailing 12 Month Yield Repurchase: 4%
- Apple Inc. (AAPL) – Trailing 12 Month Yield Repurchase: 4%
- Juniper Networks (JNPR) – Trailing 12 Month Yield Repurchase: 4%
- Cognizant Tech Solutions (CTSH) – Trailing 12 Month Return Repurchase: 4%
- KLA Corp. (KLAC) – Repurchase Trailing 12 Month Yield: 4%
Materials (XLB)
- Steel Dynamics Inc. (STLD) – Repurchase Trailing 12 Month Yield: 9%
Real Estate (XLRE)
- CBRE Group Inc. (CBRE) – Trailing 12 Month Yield Repurchase: 3%
Utilities (XLU)
- NRG Energy Inc. (NRG) – Trailing 12 Month Yield Repurchase: 16%