Insider Purchases & Buybacks: AutoNation, EMC

Typically, for Friday's Insider Purchases & Buybacks column, I'd write a summary of the week's insider purchases and top buybacks. But there have been too many new buybacks for me not to present you with a couple of names that I believe make for attractive investments because of their buybacks: AutoNation (AN - commentary - Cramer's Take) and EMC (EMC - commentary - Cramer's Take).

AutoNation

AutoNation's board just cleared the company to spend an additional $250 million on repurchasing shares. That's about 7.3% of the current outstanding share float. And so far, AutoNation has deployed $488.4 million of the $500 million share repurchase program that was authorized earlier this year.

Many companies authorize the purchase of shares, but take years to complete them. AutoNation nearly completed its entire buyback program in five months. I expect this $250 million to be put to use in the same quick fashion as the previous buyback because the company pretty clearly feels its shares are undervalued.

AutoNation is the country's largest automotive retailer, employing 26,000 people at more than 300 dealerships in 16 states. It achieves annually over $19 billion in revenue and Fortune Magazine ranked it as "America's Most Admired Automotive Retailer" five of the last six years. AutoNation sells new and used cars, parts, service, finance and insurance. Selling cars accounts for 80% of revenue, but parts and services are AutoNation's most profitable business lines. AutoNation's parts and services department generates more revenue than any other single retailer's.

AutoNation recently reported third-quarter earnings of $77 million, or 39 cents per share, slightly down from results in the same quarter of last year's net income from continuing operations of $85 million, or 40 cents per share. Revenue in the most recent third quarter was $4.66 billion, compared to $4.9 billion in the prior year's quarter.

The slight fall in earnings and revenue in the most recent quarter reflects a slowdown in new vehicle retail sales, especially in California and Florida. Together, these two states account for 50% of AutoNation's new vehicle sales.

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At the time of publication, Raznick was long EMC, although positions may change at any time.

Jason Raznick is president of Easy Stock Alerts and has been involved with the capital markets for several years. He has worked for Merrill Lynch, Dynamis and Tricap Holdings, a joint venture with Fortress Investment Group. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Raznick appreciates your feedback; click here to send him an email.