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These Are Exactly The Kinds Of Stocks You Want To Own Right Now...

 April 11, 2012 10:42 AM

By Street Authority
Roughly one month ago, online travel provider Priceline.com (Nasdaq: PCLN) made a nice gesture toward shareholders, announcing plans to buy back $200 million worth of company stock. Investors should hope that the company doesn't follow through on this plan, because shares have shot up roughly $120 since the March 7 announcement to a lofty $763.

This means Priceline will buy back fewer shares than the month-ago announcement would imply. Priceline would be better off canceling that buyback plan, perhaps waiting for a major pullback before putting a buyback plan into motion.

Sadly, Priceline.com has plenty of company.

I went back and looked at every stock buyback announcement since October 2011, and in most instances, the current share price is solidly higher than when the buyback plan was first announced. As I've noted in the past, buying back stock while it trades at multi-year highs has proven to be a big waste of shareholder money.

Instead, it's wiser to look at stocks that have fallen since the buyback was announced. The lower share price is clearly good news, because the share count can be reduced that much more quickly with a fixed amount of funds.

To be sure, buybacks create a solid backstop for nervous investors. State Street (NYSE: STT), Keycorp. (NYSE: KEY), Comerica (NYSE: CMA)Dycom (NYSE: DY) and Safeway (NYSE: SWY) have all announced buybacks in the past 30 days, and if the market swoons in coming weeks, then these buyback plans should provide buying support as the companies buy back stock that investors are selling.

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