A
buyback stock is stock in a company that buys back a significant
number of its own shares. For 50 years, buyback stocks have
outperformed the market – sometimes spectacularly so.
Here are some examples of how much stocks can go up during
a buyback.
|
Company
|
Share
price before buyback
|
Share
price after buyback
|
Percent
increase
|
|
Kellogg
|
8.75
|
70
|
1,072%
|
|
Abbott
Labs
|
5.35
|
40
|
957%
|
|
Phillip
Morris
|
9.10
|
73
|
1,230%
|
|
Geico
Corp.
|
11.45
|
56
|
741%
|
|
UST
Inc.
|
4.65
|
28
|
916%
|
|
Coca-Cola
|
4.80
|
65
|
1,760%
|
|
Bandag,
Inc.
|
11.70
|
62
|
618%
|
|
Becton,
D’son
|
9.00
|
58
|
790%
|
Why
Buyback Stocks Perform So Spectacularly
When companies buy back their own stocks, it reflects an enormous
vote of confidence in the stock by those who know it best – the
company’s senior executives. No one else knows more about the
firm’s financial situation, its market share, business plans,
research and development programs or new products. However, those
executives aren’t talking; they usually keep their plans, tactics
and research behind closed doors. But a stock buyback tips you off
that the stock is primed to go up. To capitalize on the huge returns,
four years ago I created my exclusive Buyback Strategy.