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Kubbon
2021-05-19

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These growth companies may be primed for massive stock buybacks

Free cash flow can highlight growth stocks that may be supported by share repurchases. Apple is expe

These growth companies may be primed for massive stock buybacks

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{"i18n":{"language":"zh_CN"},"data":{"magic":2,"id":194620356,"tweetId":"194620356","gmtCreate":1621378875975,"gmtModify":1634192105300,"author":{"id":3573125338979065,"idStr":"3573125338979065","authorId":3573125338979065,"authorIdStr":"3573125338979065","name":"Kubbon","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":0,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>Great ariticle, would you like to share it?</p></body></html>","htmlText":"<html><head></head><body><p>Great ariticle, would you like to share it?</p></body></html>","text":"Great ariticle, would you like to share it?","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/194620356","repostId":2136955765,"repostType":4,"repost":{"id":"2136955765","pubTimestamp":1621320795,"share":"https://www.laohu8.com/m/news/2136955765?lang=&edition=full","pubTime":"2021-05-18 14:53","market":"us","language":"en","title":"These growth companies may be primed for massive stock buybacks","url":"https://stock-news.laohu8.com/highlight/detail?id=2136955765","media":"MarketWatch","summary":"Free cash flow can highlight growth stocks that may be supported by share repurchases.\nApple is expe","content":"<p>Free cash flow can highlight growth stocks that may be supported by share repurchases.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ddd58c3c87423e3952362b6c9d60c20b\" tg-width=\"1260\" tg-height=\"839\"><span>Apple is expected by analysts to generate sufficient free cash flow in calendar 2021 to cover higher dividends or significant share buybacks. (AFP via Getty Images)</span></p>\n<p>Economists' projections for an incredible U.S. rebound in 2021 are coming true. In the stock market, this year may go down as \"the year of the buyback.\"</p>\n<p>In April, U.S. companies announced $208 billion in new buyback programs, the second-highest monthly amount .</p>\n<p>Net buybacks -- those large enough to lower the share count by mitigating the dilution caused when company boards of directors hand new shares to executives -- are important to investors because they increase earnings per share. Higher earnings per share, or EPS, typically support higher stock prices.</p>\n<p>Why are companies getting set to buy back so much stock? Because they curtailed capital deployment in 2020 to protect themselves from the disruption of the coronavirus pandemic.</p>\n<p>Now, during a rapid economy recovery, the U.S. money supply has increased dramatically, as the Federal Reserve has grown its balance sheet through bond purchases. Very low interest rates have also helped set the stage for buybacks.</p>\n<p>The largest U.S. banks were required by the Federal Reserve to stop buying back shares last June because of the pandemic. The group's capital ratios have increased and the Fed has announced that banks will be allowed to resume buybacks after June 30, when the regulator's annual stress tests have been completed.</p>\n<p><b>Best-positioned companies</b></p>\n<p>One way to measure a company's ability to deploy capital is to look at its free cash flow yield. This can be done on a trailing basis, but 2020 was a year of disruption, to say the least. So the following data is based on free cash flow projections for 2021 among analysts polled by FactSet.</p>\n<p>A company's free cash flow is its remaining cash flow after planned capital expenditures. It is money that can be used to repurchase shares, increase dividends or for other corporate purposes, including acquisitions or expansion.</p>\n<p>If we divide a company's estimated free cash flow per share by the current share price, we have an estimate of free cash flow yield. If we subtract the current dividend yield from the FCF yield, we have estimated \"headroom\" for capital deployment -- including buybacks and dividend increases.</p>\n<p>Free cash flow estimates aren't available for financial companies or for real estate investment trusts (REITs).</p>\n<p>Now that we know what to look for when trying to identify companies that are well-positioned to repurchase shares, it might also be interesting to narrow the field to \"growth\" companies -- those with typically more rapid sales and earnings growth.</p>\n<p>To review a group of growth stocks, we began this stock screen with the Vanguard Russell 1000 Growth Index ETF <a href=\"https://laohu8.com/S/VONG\">$(VONG)$</a>, which tracks the Russell 1000 Growth Index . (The <a href=\"https://laohu8.com/S/EEME\">iShares</a> Russell 1000 Growth ETF <a href=\"https://laohu8.com/S/IWF\">$(IWF)$</a> tracks the same index.) You can read how FTSE Russell describes the makeup of its indexes here .</p>\n<p>The Russell 1000 Growth Index is weighted by market capitalization. So the largest position of VONG is Apple Inc. <a href=\"https://laohu8.com/S/AAPL\">$(AAPL)$</a>, which makes up 10.5% of the portfolio. Using Apple as an example, analysts polled by FactSet estimate the company's free cash flow per share for calendar 2021 will be $5.61. (We're using the calendar year to keep the data uniform. Some companies, including Apple, have fiscal years that don't match the calendar.)</p>\n<p>If we divide Apple's projected calendar 2021 FCF by the closing share price of $127.45 on May 14, we have an estimated FCF yield of 4.40%. If we subtract the current dividend yield of 0.69% from the FCF yield, we have estimated \"headroom\" of 3.71%. Relative to the dividend yield, it appears Apple will have plenty of extra cash to deploy.</p>\n<p>Going back to the Russell 1000 Growth Index and excluding the financials and REITs, we're left with 437 companies and FactSet has calendar 2021 FCF estimates for 350 of them.</p>\n<p><b>Most 'headroom'</b></p>\n<p>Here are the 20 companies with the most free cash flow \"headroom,\" based on consensus estimates for calendar 2021.</p>\n<p>Note: Scroll the table to see all the data.</p>\n<table>\n <thead>\n  <tr>\n   <th>COMPANY</th>\n   <th>TICKER</th>\n   <th>ESTIMATED FREE CASH FLOW PER SHARE</th>\n   <th>CLOSING PRICE - MAY 14</th>\n   <th>ESTIMATED FCF YIELD</th>\n   <th>DIVIDEND YIELD</th>\n   <th>HEADROOM</th>\n   <th>MARKET CAP. ($MIL)</th>\n  </tr>\n </thead>\n <tbody>\n  <tr>\n   <td>Nexstar Media Group Inc. Class A</td>\n   <td>NXST</td>\n   <td>$26.71</td>\n   <td>$150.90</td>\n   <td>17.70%</td>\n   <td>1.86%</td>\n   <td>15.84%</td>\n   <td>$6,450</td>\n  </tr>\n  <tr>\n   <td>Moderna Inc.</td>\n   <td>MRNA</td>\n   <td>$23.35</td>\n   <td>$161.38</td>\n   <td>14.47%</td>\n   <td>0.00%</td>\n   <td>14.47%</td>\n   <td>$64,799</td>\n  </tr>\n  <tr>\n   <td>CommScope Holding Co. Inc.</td>\n   <td>COMM</td>\n   <td>$2.20</td>\n   <td>$18.16</td>\n   <td>12.11%</td>\n   <td>0.00%</td>\n   <td>12.11%</td>\n   <td>$3,706</td>\n  </tr>\n  <tr>\n   <td>Dell Technologies Inc. Class C</td>\n   <td>DELL</td>\n   <td>$11.66</td>\n   <td>$98.43</td>\n   <td>11.85%</td>\n   <td>0.00%</td>\n   <td>11.85%</td>\n   <td>$27,322</td>\n  </tr>\n  <tr>\n   <td>NRG Energy Inc.</td>\n   <td>NRG</td>\n   <td>$5.27</td>\n   <td>$34.33</td>\n   <td>15.35%</td>\n   <td>3.79%</td>\n   <td>11.57%</td>\n   <td>$8,402</td>\n  </tr>\n  <tr>\n   <td>McKesson Corp.</td>\n   <td>MCK</td>\n   <td>$23.95</td>\n   <td>$195.00</td>\n   <td>12.28%</td>\n   <td>0.86%</td>\n   <td>11.42%</td>\n   <td>$30,846</td>\n  </tr>\n  <tr>\n   <td>Liberty Media Corp. Series A Liberty SiriusXM</td>\n   <td>LSXMA</td>\n   <td>$4.63</td>\n   <td>$41.72</td>\n   <td>11.10%</td>\n   <td>0.00%</td>\n   <td>11.10%</td>\n   <td>$4,103</td>\n  </tr>\n  <tr>\n   <td>Liberty Media Corp. Series C Liberty SiriusXM</td>\n   <td>LSXMK</td>\n   <td>$4.63</td>\n   <td>$41.78</td>\n   <td>11.08%</td>\n   <td>0.00%</td>\n   <td>11.08%</td>\n   <td>$9,502</td>\n  </tr>\n  <tr>\n   <td>H&amp;R Block Inc.</td>\n   <td>HRB</td>\n   <td>$3.51</td>\n   <td>$24.55</td>\n   <td>14.28%</td>\n   <td>4.24%</td>\n   <td>10.05%</td>\n   <td>$4,454</td>\n  </tr>\n  <tr>\n   <td>Berry Global Group Inc.</td>\n   <td>BERY</td>\n   <td>$6.93</td>\n   <td>$69.19</td>\n   <td>10.01%</td>\n   <td>0.00%</td>\n   <td>10.01%</td>\n   <td>$9,334</td>\n  </tr>\n  <tr>\n   <td>Cheniere Energy Inc.</td>\n   <td>LNG</td>\n   <td>$8.05</td>\n   <td>$83.83</td>\n   <td>9.60%</td>\n   <td>0.00%</td>\n   <td>9.60%</td>\n   <td>$21,254</td>\n  </tr>\n  <tr>\n   <td>Altice USA Inc. Class A</td>\n   <td>ATUS</td>\n   <td>$3.60</td>\n   <td>$37.83</td>\n   <td>9.51%</td>\n   <td>0.00%</td>\n   <td>9.51%</td>\n   <td>$10,366</td>\n  </tr>\n  <tr>\n   <td>Cardinal Health Inc.</td>\n   <td>CAH</td>\n   <td>$7.15</td>\n   <td>$56.34</td>\n   <td>12.70%</td>\n   <td>3.45%</td>\n   <td>9.25%</td>\n   <td>$16,347</td>\n  </tr>\n  <tr>\n   <td>CACI International Inc. Class A</td>\n   <td>CACI</td>\n   <td>$22.96</td>\n   <td>$259.97</td>\n   <td>8.83%</td>\n   <td>0.00%</td>\n   <td>8.83%</td>\n   <td>$6,122</td>\n  </tr>\n  <tr>\n   <td>Jabil Inc.</td>\n   <td>JBL</td>\n   <td>$4.86</td>\n   <td>$53.94</td>\n   <td>9.00%</td>\n   <td>0.59%</td>\n   <td>8.41%</td>\n   <td>$8,026</td>\n  </tr>\n  <tr>\n   <td>Biogen Inc.</td>\n   <td>BIIB</td>\n   <td>$23.40</td>\n   <td>$280.21</td>\n   <td>8.35%</td>\n   <td>0.00%</td>\n   <td>8.35%</td>\n   <td>$42,187</td>\n  </tr>\n  <tr>\n   <td>Centene Corp.</td>\n   <td>CNC</td>\n   <td>$5.34</td>\n   <td>$69.20</td>\n   <td>7.72%</td>\n   <td>0.00%</td>\n   <td>7.72%</td>\n   <td>$40,325</td>\n  </tr>\n  <tr>\n   <td>DaVita Inc.</td>\n   <td>DVA</td>\n   <td>$9.60</td>\n   <td>$125.41</td>\n   <td>7.65%</td>\n   <td>0.00%</td>\n   <td>7.65%</td>\n   <td>$13,319</td>\n  </tr>\n  <tr>\n   <td>Neurocrine Biosciences Inc.</td>\n   <td>NBIX</td>\n   <td>$7.20</td>\n   <td>$94.60</td>\n   <td>7.61%</td>\n   <td>0.00%</td>\n   <td>7.61%</td>\n   <td>$8,944</td>\n  </tr>\n  <tr>\n   <td>Bristol-Myers Squibb Co.</td>\n   <td>BMY</td>\n   <td>$6.85</td>\n   <td>$64.88</td>\n   <td>10.56%</td>\n   <td>3.02%</td>\n   <td>7.54%</td>\n   <td>$144,937</td>\n  </tr>\n  <tr>\n   <td>Laboratory Corp. of America Holdings</td>\n   <td>LH</td>\n   <td>$20.31</td>\n   <td>$274.50</td>\n   <td>7.40%</td>\n   <td>0.00%</td>\n   <td>7.40%</td>\n   <td>$26,819</td>\n  </tr>\n </tbody>\n</table>\n<p>(FactSet)</p>\n<p>There are actually 21 rows of data on the table, because it includes both <a href=\"https://laohu8.com/S/LSXMR\">Liberty Media Corp</a>.'s Series A <a href=\"https://laohu8.com/S/LSXMA\">$(LSXMA)$</a> and Series C shares for <a href=\"https://laohu8.com/S/LFG.AU\">Liberty</a> Sirius XM.</p>\n<ul>\n <li>The company with the highest expected FCF yield of 17.70% for calendar 2021 is Nexstar Media Group Inc.,which also has the highest projected headroom of 15.84%.</li>\n <li>Next is Moderna Inc.,which has had extraordinary success with its quick development and deployment of a COVID-19 vaccine. Its estimated FCF yield for 2021 is 14.47%, and that’s also its estimated headroom because it pays no dividend on common shares. To be sure, a growth-stage company providing such a critically important product that had to raise money by issuing shares&nbsp;less than a year ago&nbsp;cannot be expected to repurchase shares this year. This shows the limitation of any stock screen and the need to do your own research whenever you consider an investment.</li>\n <li>Next on the list is CommScope Holding Co. Inc.,with an estimated FCF yield of 12.11% for 2021. With no dividend, that’s also the expected headroom figure.</li>\n <li>Dell Technologies Inc. ranks fourth, with a FCF yield and expected headroom of 11.85%. This is another stock with no dividend currently.</li>\n <li>Fifth is NRG Energy, with an estimated FCF yield of 15.35%, a dividend yield of 3.79% and expected headroom of 11.57%.</li>\n</ul>\n<p><b>Largest companies</b></p>\n<p>If you scroll the above list to the right, you can see that 10 of the companies have market capitalizations of less than $10 billion. So here's a list of the largest 20 companies in the full list of 350. You can see that two very-well-known names have have little projected FCF headroom -- and there's a good reason for that.</p>\n<table>\n <thead>\n  <tr>\n   <th>COMPANY</th>\n   <th>TICKER</th>\n   <th>ESTIMATED FREE CASH FLOW PER SHARE</th>\n   <th>CLOSING PRICE - MAY 14</th>\n   <th>ESTIMATED FCF YIELD</th>\n   <th>DIVIDEND YIELD</th>\n   <th>HEADROOM</th>\n   <th>MARKET CAP. ($MIL)</th>\n  </tr>\n </thead>\n <tbody>\n  <tr>\n   <td>Apple Inc.</td>\n   <td>AAPL</td>\n   <td>$5.61</td>\n   <td>$127.45</td>\n   <td>4.40%</td>\n   <td>0.69%</td>\n   <td>3.71%</td>\n   <td>$2,126,838</td>\n  </tr>\n  <tr>\n   <td>Microsoft Corp.</td>\n   <td>MSFT</td>\n   <td>$7.74</td>\n   <td>$248.15</td>\n   <td>3.12%</td>\n   <td>0.90%</td>\n   <td>2.22%</td>\n   <td>$1,868,960</td>\n  </tr>\n  <tr>\n   <td>Amazon.com Inc.</td>\n   <td>AMZN</td>\n   <td>$71.13</td>\n   <td>$3,222.90</td>\n   <td>2.21%</td>\n   <td>0.00%</td>\n   <td>2.21%</td>\n   <td>$1,625,385</td>\n  </tr>\n  <tr>\n   <td>Facebook Inc. Class A</td>\n   <td>FB</td>\n   <td>$11.70</td>\n   <td>$315.94</td>\n   <td>3.70%</td>\n   <td>0.00%</td>\n   <td>3.70%</td>\n   <td>$757,007</td>\n  </tr>\n  <tr>\n   <td>Alphabet Inc. Class C</td>\n   <td>GOOG</td>\n   <td>$90.66</td>\n   <td>$2,316.16</td>\n   <td>3.91%</td>\n   <td>0.00%</td>\n   <td>3.91%</td>\n   <td>$749,463</td>\n  </tr>\n  <tr>\n   <td>Alphabet Inc. Class A</td>\n   <td>GOOGL</td>\n   <td>$90.66</td>\n   <td>$2,278.38</td>\n   <td>3.98%</td>\n   <td>0.00%</td>\n   <td>3.98%</td>\n   <td>$685,216</td>\n  </tr>\n  <tr>\n   <td>Tesla Inc.</td>\n   <td>TSLA</td>\n   <td>$1.46</td>\n   <td>$589.74</td>\n   <td>0.25%</td>\n   <td>0.00%</td>\n   <td>0.25%</td>\n   <td>$568,114</td>\n  </tr>\n  <tr>\n   <td>Johnson &amp; Johnson</td>\n   <td>JNJ</td>\n   <td>$4.57</td>\n   <td>$170.22</td>\n   <td>2.68%</td>\n   <td>2.49%</td>\n   <td>0.19%</td>\n   <td>$448,257</td>\n  </tr>\n  <tr>\n   <td>UnitedHealth Group Inc.</td>\n   <td>UNH</td>\n   <td>$18.82</td>\n   <td>$409.80</td>\n   <td>4.59%</td>\n   <td>1.22%</td>\n   <td>3.37%</td>\n   <td>$386,729</td>\n  </tr>\n  <tr>\n   <td>Visa Inc. Class A</td>\n   <td>V</td>\n   <td>$6.37</td>\n   <td>$226.94</td>\n   <td>2.81%</td>\n   <td>0.56%</td>\n   <td>2.24%</td>\n   <td>$383,938</td>\n  </tr>\n  <tr>\n   <td>Mastercard Inc. Class A</td>\n   <td>MA</td>\n   <td>$7.51</td>\n   <td>$363.91</td>\n   <td>2.06%</td>\n   <td>0.48%</td>\n   <td>1.58%</td>\n   <td>$357,689</td>\n  </tr>\n  <tr>\n   <td>Nvidia Corp.</td>\n   <td>NVDA</td>\n   <td>$12.97</td>\n   <td>$569.72</td>\n   <td>2.28%</td>\n   <td>0.11%</td>\n   <td>2.16%</td>\n   <td>$354,584</td>\n  </tr>\n  <tr>\n   <td>Home Depot Inc.</td>\n   <td>HD</td>\n   <td>$14.46</td>\n   <td>$323.63</td>\n   <td>4.47%</td>\n   <td>2.04%</td>\n   <td>2.43%</td>\n   <td>$347,975</td>\n  </tr>\n  <tr>\n   <td>Procter &amp; Gamble Co.</td>\n   <td>PG</td>\n   <td>$5.60</td>\n   <td>$138.01</td>\n   <td>4.06%</td>\n   <td>2.52%</td>\n   <td>1.54%</td>\n   <td>$337,881</td>\n  </tr>\n  <tr>\n   <td>PayPal Holdings Inc.</td>\n   <td>PYPL</td>\n   <td>$5.70</td>\n   <td>$246.29</td>\n   <td>2.31%</td>\n   <td>0.00%</td>\n   <td>2.31%</td>\n   <td>$289,324</td>\n  </tr>\n  <tr>\n   <td>Coca-Cola Co.</td>\n   <td>KO</td>\n   <td>$2.03</td>\n   <td>$54.73</td>\n   <td>3.71%</td>\n   <td>3.07%</td>\n   <td>0.64%</td>\n   <td>$235,978</td>\n  </tr>\n  <tr>\n   <td>Adobe Inc.</td>\n   <td>ADBE</td>\n   <td>$13.43</td>\n   <td>$486.56</td>\n   <td>2.76%</td>\n   <td>0.00%</td>\n   <td>2.76%</td>\n   <td>$232,576</td>\n  </tr>\n  <tr>\n   <td>Oracle Corp.</td>\n   <td>ORCL</td>\n   <td>$4.25</td>\n   <td>$78.89</td>\n   <td>5.39%</td>\n   <td>1.62%</td>\n   <td>3.77%</td>\n   <td>$227,482</td>\n  </tr>\n  <tr>\n   <td>Netflix Inc.</td>\n   <td>NFLX</td>\n   <td>$0.64</td>\n   <td>$493.37</td>\n   <td>0.13%</td>\n   <td>0.00%</td>\n   <td>0.13%</td>\n   <td>$218,762</td>\n  </tr>\n  <tr>\n   <td>Abbott Laboratories</td>\n   <td>ABT</td>\n   <td>$5.79</td>\n   <td>$118.31</td>\n   <td>4.89%</td>\n   <td>1.52%</td>\n   <td>3.37%</td>\n   <td>$210,216</td>\n  </tr>\n  <tr>\n   <td>AbbVie Inc.</td>\n   <td>ABBV</td>\n   <td>$10.54</td>\n   <td>$116.43</td>\n   <td>9.05%</td>\n   <td>4.47%</td>\n   <td>4.59%</td>\n   <td>$205,641</td>\n  </tr>\n </tbody>\n</table>\n<p>(FactSet)</p>\n<p>Once again, the list of 20 companies actually has 21 rows of data, because two share classes of Google holding company Alphabet Inc. <a href=\"https://laohu8.com/S/GOOGL\">$(GOOGL)$</a>(GOOGL) are included. The company doesn't pay a dividend on either share class. The estimated yield and headroom are 3.91% for the Class C shares and 3.98% for the Class A shares.</p>\n<ul>\n <li>Following Apple, which is discussed above, the second-largest company on the list is Microsoft Corp.,with an estimated FCF yield of 3.12% and a dividend yield of 0.90%, leaving estimated headroom of 2.22%. That’s significantly lower than Apple’s estimated headroom of 3.71%.</li>\n <li>The company on the list with the lowest estimated FCF yield for 2021 is Netflix Inc.,which for years has plowed its cash flow into content creation. The company has turned a corner, with positive cash flow, and isset to resume buying back shares after a 10-year break.</li>\n <li>Second-lowest for estimated FCF headroom on the list is Tesla Inc.,which is also in a rapid-growth phase, with several factories under construction.</li>\n <li>Among the 20 largest companies listed, AbbVie Inc.&nbsp;has the highest estimated FCF headroom of 4.59%. Its estimated FCF yield for 2021 is 9.05% and its dividend yield is 4.47% — the highest for any company listed in this article.</li>\n</ul>","source":"lsy1603348471595","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>These growth companies may be primed for massive stock buybacks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThese growth companies may be primed for massive stock buybacks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-18 14:53 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/story/these-growth-companies-may-be-primed-for-massive-stock-buybacks-11621265543?mod=home-page><strong>MarketWatch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Free cash flow can highlight growth stocks that may be supported by share repurchases.\nApple is expected by analysts to generate sufficient free cash flow in calendar 2021 to cover higher dividends or...</p>\n\n<a href=\"https://www.marketwatch.com/story/these-growth-companies-may-be-primed-for-massive-stock-buybacks-11621265543?mod=home-page\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"https://www.marketwatch.com/story/these-growth-companies-may-be-primed-for-massive-stock-buybacks-11621265543?mod=home-page","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2136955765","content_text":"Free cash flow can highlight growth stocks that may be supported by share repurchases.\nApple is expected by analysts to generate sufficient free cash flow in calendar 2021 to cover higher dividends or significant share buybacks. (AFP via Getty Images)\nEconomists' projections for an incredible U.S. rebound in 2021 are coming true. In the stock market, this year may go down as \"the year of the buyback.\"\nIn April, U.S. companies announced $208 billion in new buyback programs, the second-highest monthly amount .\nNet buybacks -- those large enough to lower the share count by mitigating the dilution caused when company boards of directors hand new shares to executives -- are important to investors because they increase earnings per share. Higher earnings per share, or EPS, typically support higher stock prices.\nWhy are companies getting set to buy back so much stock? Because they curtailed capital deployment in 2020 to protect themselves from the disruption of the coronavirus pandemic.\nNow, during a rapid economy recovery, the U.S. money supply has increased dramatically, as the Federal Reserve has grown its balance sheet through bond purchases. Very low interest rates have also helped set the stage for buybacks.\nThe largest U.S. banks were required by the Federal Reserve to stop buying back shares last June because of the pandemic. The group's capital ratios have increased and the Fed has announced that banks will be allowed to resume buybacks after June 30, when the regulator's annual stress tests have been completed.\nBest-positioned companies\nOne way to measure a company's ability to deploy capital is to look at its free cash flow yield. This can be done on a trailing basis, but 2020 was a year of disruption, to say the least. So the following data is based on free cash flow projections for 2021 among analysts polled by FactSet.\nA company's free cash flow is its remaining cash flow after planned capital expenditures. It is money that can be used to repurchase shares, increase dividends or for other corporate purposes, including acquisitions or expansion.\nIf we divide a company's estimated free cash flow per share by the current share price, we have an estimate of free cash flow yield. If we subtract the current dividend yield from the FCF yield, we have estimated \"headroom\" for capital deployment -- including buybacks and dividend increases.\nFree cash flow estimates aren't available for financial companies or for real estate investment trusts (REITs).\nNow that we know what to look for when trying to identify companies that are well-positioned to repurchase shares, it might also be interesting to narrow the field to \"growth\" companies -- those with typically more rapid sales and earnings growth.\nTo review a group of growth stocks, we began this stock screen with the Vanguard Russell 1000 Growth Index ETF $(VONG)$, which tracks the Russell 1000 Growth Index . (The iShares Russell 1000 Growth ETF $(IWF)$ tracks the same index.) You can read how FTSE Russell describes the makeup of its indexes here .\nThe Russell 1000 Growth Index is weighted by market capitalization. So the largest position of VONG is Apple Inc. $(AAPL)$, which makes up 10.5% of the portfolio. Using Apple as an example, analysts polled by FactSet estimate the company's free cash flow per share for calendar 2021 will be $5.61. (We're using the calendar year to keep the data uniform. Some companies, including Apple, have fiscal years that don't match the calendar.)\nIf we divide Apple's projected calendar 2021 FCF by the closing share price of $127.45 on May 14, we have an estimated FCF yield of 4.40%. If we subtract the current dividend yield of 0.69% from the FCF yield, we have estimated \"headroom\" of 3.71%. Relative to the dividend yield, it appears Apple will have plenty of extra cash to deploy.\nGoing back to the Russell 1000 Growth Index and excluding the financials and REITs, we're left with 437 companies and FactSet has calendar 2021 FCF estimates for 350 of them.\nMost 'headroom'\nHere are the 20 companies with the most free cash flow \"headroom,\" based on consensus estimates for calendar 2021.\nNote: Scroll the table to see all the data.\n\n\n\nCOMPANY\nTICKER\nESTIMATED FREE CASH FLOW PER SHARE\nCLOSING PRICE - MAY 14\nESTIMATED FCF YIELD\nDIVIDEND YIELD\nHEADROOM\nMARKET CAP. ($MIL)\n\n\n\n\nNexstar Media Group Inc. Class A\nNXST\n$26.71\n$150.90\n17.70%\n1.86%\n15.84%\n$6,450\n\n\nModerna Inc.\nMRNA\n$23.35\n$161.38\n14.47%\n0.00%\n14.47%\n$64,799\n\n\nCommScope Holding Co. Inc.\nCOMM\n$2.20\n$18.16\n12.11%\n0.00%\n12.11%\n$3,706\n\n\nDell Technologies Inc. Class C\nDELL\n$11.66\n$98.43\n11.85%\n0.00%\n11.85%\n$27,322\n\n\nNRG Energy Inc.\nNRG\n$5.27\n$34.33\n15.35%\n3.79%\n11.57%\n$8,402\n\n\nMcKesson Corp.\nMCK\n$23.95\n$195.00\n12.28%\n0.86%\n11.42%\n$30,846\n\n\nLiberty Media Corp. Series A Liberty SiriusXM\nLSXMA\n$4.63\n$41.72\n11.10%\n0.00%\n11.10%\n$4,103\n\n\nLiberty Media Corp. Series C Liberty SiriusXM\nLSXMK\n$4.63\n$41.78\n11.08%\n0.00%\n11.08%\n$9,502\n\n\nH&R Block Inc.\nHRB\n$3.51\n$24.55\n14.28%\n4.24%\n10.05%\n$4,454\n\n\nBerry Global Group Inc.\nBERY\n$6.93\n$69.19\n10.01%\n0.00%\n10.01%\n$9,334\n\n\nCheniere Energy Inc.\nLNG\n$8.05\n$83.83\n9.60%\n0.00%\n9.60%\n$21,254\n\n\nAltice USA Inc. Class A\nATUS\n$3.60\n$37.83\n9.51%\n0.00%\n9.51%\n$10,366\n\n\nCardinal Health Inc.\nCAH\n$7.15\n$56.34\n12.70%\n3.45%\n9.25%\n$16,347\n\n\nCACI International Inc. Class A\nCACI\n$22.96\n$259.97\n8.83%\n0.00%\n8.83%\n$6,122\n\n\nJabil Inc.\nJBL\n$4.86\n$53.94\n9.00%\n0.59%\n8.41%\n$8,026\n\n\nBiogen Inc.\nBIIB\n$23.40\n$280.21\n8.35%\n0.00%\n8.35%\n$42,187\n\n\nCentene Corp.\nCNC\n$5.34\n$69.20\n7.72%\n0.00%\n7.72%\n$40,325\n\n\nDaVita Inc.\nDVA\n$9.60\n$125.41\n7.65%\n0.00%\n7.65%\n$13,319\n\n\nNeurocrine Biosciences Inc.\nNBIX\n$7.20\n$94.60\n7.61%\n0.00%\n7.61%\n$8,944\n\n\nBristol-Myers Squibb Co.\nBMY\n$6.85\n$64.88\n10.56%\n3.02%\n7.54%\n$144,937\n\n\nLaboratory Corp. of America Holdings\nLH\n$20.31\n$274.50\n7.40%\n0.00%\n7.40%\n$26,819\n\n\n\n(FactSet)\nThere are actually 21 rows of data on the table, because it includes both Liberty Media Corp.'s Series A $(LSXMA)$ and Series C shares for Liberty Sirius XM.\n\nThe company with the highest expected FCF yield of 17.70% for calendar 2021 is Nexstar Media Group Inc.,which also has the highest projected headroom of 15.84%.\nNext is Moderna Inc.,which has had extraordinary success with its quick development and deployment of a COVID-19 vaccine. Its estimated FCF yield for 2021 is 14.47%, and that’s also its estimated headroom because it pays no dividend on common shares. To be sure, a growth-stage company providing such a critically important product that had to raise money by issuing shares less than a year ago cannot be expected to repurchase shares this year. This shows the limitation of any stock screen and the need to do your own research whenever you consider an investment.\nNext on the list is CommScope Holding Co. Inc.,with an estimated FCF yield of 12.11% for 2021. With no dividend, that’s also the expected headroom figure.\nDell Technologies Inc. ranks fourth, with a FCF yield and expected headroom of 11.85%. This is another stock with no dividend currently.\nFifth is NRG Energy, with an estimated FCF yield of 15.35%, a dividend yield of 3.79% and expected headroom of 11.57%.\n\nLargest companies\nIf you scroll the above list to the right, you can see that 10 of the companies have market capitalizations of less than $10 billion. So here's a list of the largest 20 companies in the full list of 350. You can see that two very-well-known names have have little projected FCF headroom -- and there's a good reason for that.\n\n\n\nCOMPANY\nTICKER\nESTIMATED FREE CASH FLOW PER SHARE\nCLOSING PRICE - MAY 14\nESTIMATED FCF YIELD\nDIVIDEND YIELD\nHEADROOM\nMARKET CAP. ($MIL)\n\n\n\n\nApple Inc.\nAAPL\n$5.61\n$127.45\n4.40%\n0.69%\n3.71%\n$2,126,838\n\n\nMicrosoft Corp.\nMSFT\n$7.74\n$248.15\n3.12%\n0.90%\n2.22%\n$1,868,960\n\n\nAmazon.com Inc.\nAMZN\n$71.13\n$3,222.90\n2.21%\n0.00%\n2.21%\n$1,625,385\n\n\nFacebook Inc. Class A\nFB\n$11.70\n$315.94\n3.70%\n0.00%\n3.70%\n$757,007\n\n\nAlphabet Inc. Class C\nGOOG\n$90.66\n$2,316.16\n3.91%\n0.00%\n3.91%\n$749,463\n\n\nAlphabet Inc. Class A\nGOOGL\n$90.66\n$2,278.38\n3.98%\n0.00%\n3.98%\n$685,216\n\n\nTesla Inc.\nTSLA\n$1.46\n$589.74\n0.25%\n0.00%\n0.25%\n$568,114\n\n\nJohnson & Johnson\nJNJ\n$4.57\n$170.22\n2.68%\n2.49%\n0.19%\n$448,257\n\n\nUnitedHealth Group Inc.\nUNH\n$18.82\n$409.80\n4.59%\n1.22%\n3.37%\n$386,729\n\n\nVisa Inc. Class A\nV\n$6.37\n$226.94\n2.81%\n0.56%\n2.24%\n$383,938\n\n\nMastercard Inc. Class A\nMA\n$7.51\n$363.91\n2.06%\n0.48%\n1.58%\n$357,689\n\n\nNvidia Corp.\nNVDA\n$12.97\n$569.72\n2.28%\n0.11%\n2.16%\n$354,584\n\n\nHome Depot Inc.\nHD\n$14.46\n$323.63\n4.47%\n2.04%\n2.43%\n$347,975\n\n\nProcter & Gamble Co.\nPG\n$5.60\n$138.01\n4.06%\n2.52%\n1.54%\n$337,881\n\n\nPayPal Holdings Inc.\nPYPL\n$5.70\n$246.29\n2.31%\n0.00%\n2.31%\n$289,324\n\n\nCoca-Cola Co.\nKO\n$2.03\n$54.73\n3.71%\n3.07%\n0.64%\n$235,978\n\n\nAdobe Inc.\nADBE\n$13.43\n$486.56\n2.76%\n0.00%\n2.76%\n$232,576\n\n\nOracle Corp.\nORCL\n$4.25\n$78.89\n5.39%\n1.62%\n3.77%\n$227,482\n\n\nNetflix Inc.\nNFLX\n$0.64\n$493.37\n0.13%\n0.00%\n0.13%\n$218,762\n\n\nAbbott Laboratories\nABT\n$5.79\n$118.31\n4.89%\n1.52%\n3.37%\n$210,216\n\n\nAbbVie Inc.\nABBV\n$10.54\n$116.43\n9.05%\n4.47%\n4.59%\n$205,641\n\n\n\n(FactSet)\nOnce again, the list of 20 companies actually has 21 rows of data, because two share classes of Google holding company Alphabet Inc. $(GOOGL)$(GOOGL) are included. The company doesn't pay a dividend on either share class. The estimated yield and headroom are 3.91% for the Class C shares and 3.98% for the Class A shares.\n\nFollowing Apple, which is discussed above, the second-largest company on the list is Microsoft Corp.,with an estimated FCF yield of 3.12% and a dividend yield of 0.90%, leaving estimated headroom of 2.22%. That’s significantly lower than Apple’s estimated headroom of 3.71%.\nThe company on the list with the lowest estimated FCF yield for 2021 is Netflix Inc.,which for years has plowed its cash flow into content creation. The company has turned a corner, with positive cash flow, and isset to resume buying back shares after a 10-year break.\nSecond-lowest for estimated FCF headroom on the list is Tesla Inc.,which is also in a rapid-growth phase, with several factories under construction.\nAmong the 20 largest companies listed, AbbVie Inc. has the highest estimated FCF headroom of 4.59%. Its estimated FCF yield for 2021 is 9.05% and its dividend yield is 4.47% — the highest for any company listed in this article.","news_type":1},"isVote":1,"tweetType":1,"viewCount":92,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":36,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}