6 Stocks With Major New Share Buybacks

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 |  Includes: BBY, CPB, FMCN, LDK, MDT, SPGI
by: Rougemont

The companies below have announced substantial share repurchase plans. I regularly seek out companies that are enacting major company share buybacks to help me find stocks that might be undervalued. When companies buy shares back, it reduces the number of shares outstanding, which can increase the earnings per share over time. It is good to see that while many companies are busy issuing more stock and diluting existing shareholders, these companies are putting some of their cash to work by buying stock. When a board acts to repurchase shares, it can be a sign that the company is undervalued, so I think these companies are worth considering as possible investments:

LDK Solar (NYSE:LDK) recently authorized a share repurchase of $110 million. Based on a market cap of about $1 billion, this would repurchase about 10% of the outstanding shares at current prices, and more importantly it would buy about 30% of the float. LDK shares trade for about $7.42 per share. Earnings estimates for LDK are $2.28 per share in 2011. The 52 week range is $5 to $15.10. This company is very profitable and has access to major credit lines, so more repurchases are possible later. You can read about the share repurchase plan here.

McGraw-Hill Companies, Inc., (MHP) recently authorized a share repurchase of up to 50 million shares. Based on MHP having about 304 million shares outstanding, this would repurchase around 17% of the outstanding shares at current prices. MHP shares trade for $41.60 per share. Earnings estimates for MHP are $2.87 per share in 2011 and $3.16 for 2012. The 52 week range is $27.08 to $43.50. You can read about the share repurchase plan here.

Campbell Soup Company (NYSE:CPB) recently authorized a share repurchase of $1 billion. Based on a market cap of about $11 billion, this would repurchase nearly 10% of the outstanding shares at current prices. CPB shares trade for $34.50 per share. Earnings estimates for CPB are $2.45 per share in 2011 and $2.47 for 2012. The 52 week range is $32.66 to $37.59. You can read about the share repurchase plan here.

Best Buy Co., Inc., (NYSE:BBY) recently authorized a share repurchase of $5 billion. Based on a market cap of about $12.3 billion, this would repurchase about 40% of the outstanding shares at current prices. BBY shares trade for $31.50 per share. Earnings estimates for BBY are $3.49 per share in 2011 and $3.72 for 2012. The 52 week range is $28.09 to $45.63. You can read about the share repurchase plan here.

Medtronic, Inc., (NYSE:MDT) recently authorized a share repurchase of 75 million shares. Based on MDT having about 1 billion shares outstanding, this would repurchase around 7% of the outstanding shares at current prices. MDT shares trade for $38.68 per share. Earnings estimates for MDT are $3.47 per share in 2011 and $3.80 for 2012. The 52 week range is $30.80 to $43.33. You can read about the share repurchase plan here.

Focus Media (NASDAQ:FMCN) recently authorized an increased share repurchase of up to $450 million. Based on a market cap of about $4.2 billion, this would repurchase about 10% of the outstanding shares at current prices. FMCN shares trade for $31.06 per share. Earnings estimates for FMCN are $1.49 per share in 2011 and $1.76 for 2012. The 52 week range is $14.82 to $37.58. You can read about the share repurchase plan here.

The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.

Disclosure: I am long LDK.