Biggest Buybacks: Top 10 Stocks Buying Back Shares in the S&P 500

Biggest Buybacks: Top 10 Stocks Buying Back Shares in the S&P 500

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10 stocks buying back stock, stock buy backs, buybacks 2023, stocks to buy in 2023

On January 1st, a law built into the Inflation Reduction Act added a 1% excise tax on share buybacks. Leading up to the day it went into effect, many believed that it would cause a significant reduction in the amount of money that companies were willing to spend buying back their own stock. However, in the face of a Fed that has all-but-signaled it is about to end its 14-month long journey of hiking rates, and a stock market that is still trading more than 13% below its 2022 high, companies are stepping in. Before we reveal the top 10 stock buybacks happening right now, let’s talk about what a buyback is, and why it’s so bullish for stocks.

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WHAT IS A SHARE BUYBACK?

A share buyback is when a company buys back its own shares of stock. This can be done through open market purchases or through a tender offer. When a company buys back its own shares, it reduces the number of shares outstanding. This can lead to an increase in earnings per share (EPS), which can make the stock more attractive to investors.

There are a lot of reasons why share buybacks can be effective in raising stock value. First, they can signal to investors that the company is confident in its future prospects. Think about it — companies care about their bottom line. If they spent money buying back shares, only to see the value of the shares fall, then just like anyone else — they would have made a bad investment. However, companies know better than anyone else what is going on within their own business. If they feel bullish enough to put their money where their mouth is, that could be a good sign that they may be gearing up for a period of growth, expansion, or profitability. 

Second, and most importantly, share buybacks reduce the number of shares outstanding, which can lead to an increase in EPS. When a company buys back its own shares, it reduces the number of shares outstanding. This can lead to an increase in earnings per share, which is calculated by dividing a company’s net income by the number of shares outstanding. 

Third, share buybacks can generate momentum — boosting the company’s share price by increasing demand for its stock as investors jump in to news that most people accept is undeniably bullish. Here are few additional perks of share buybacks:

  • Improved return on equity (ROE): ROE is a measure of how profitable a company is relative to its equity. When a company buys back its own shares, it increases its ROE because it is essentially returning money to shareholders.
  • Reduced volatility: Share buybacks can help to reduce stock price volatility. This is because they provide a floor for the stock price, as the company is committed to buying back its own shares at a certain price.
  • Increased shareholder value: Share buybacks can help to increase shareholder value by boosting EPS, ROE, and reducing volatility.

So now that we’ve covered why share buybacks are a good thing (and identified that the biggest, most important reason is simply supply and demand — AKA, less shares on the market), let’s hone in on which companies in the S&P 500 are snapping up the most shares of their own stock by percentage, over the past year.

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VALERO ENERGY BUYBACK (VLO)

Over the past year, Valero Energy share buybacks have reduced the total value of common shares on the market by -9.56%.

CONOCOPHILIPS BUYBACK (COP)

Over the past year, ConocoPhillips share buybacks have reduced the total value of common shares on the market by -6.43%.

METLIFE BUYBACK (MET)

Over the past year, MetLife share buybacks have reduced the total value of common shares on the market by -5.94%.

META PLATFORMS BUYBACK (META)

Over the past year, Meta Platforms share buybacks have reduced the total value of common shares on the market by -5.32%.

ANALOG DEVICES BUYBACK (ADI)

Over the past year, Analog Devices share buybacks have reduced the total value of common shares on the market by -3.58%.

PAYPAL HOLDINGS BUYBACK (PYPL)

Over the past year, PayPal share buybacks have reduced the total value of common shares on the market by -3.24%.

LINDE BUYBACK (LIN)

Over the past year, Linde share buybacks have reduced the total value of common shares on the market by -3.08%.

CHUBB LIMITED BUYBACK (CB)

Over the past year, Chubb Limited share buybacks have reduced the total value of common shares on the market by -2.76%.

WALMART INC BUYBACK (WMT)

Over the past year, Walmart share buybacks have reduced the total value of common shares on the market by -2.70%.

NVIDIA CORP BUYBACK (NVDA)

Over the past year, Nvidia share buybacks have reduced the total value of common shares on the market by -2.67%.

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