Insider Purchases & Buybacks: I Want My DTV

A repeated stock buyback indicates that a company continues to see value in its shares. DirecTV Group (DTV - commentary - Cramer's Take) has recently raised its buyback plans. (On Stockpickr, you can see the rest of the insider trades and buybacks).

DirecTV's board has approved the buyback of shares worth $1 billion, representing 4.4% of the outstanding shares. The company has just completed another $1 billion share repurchase plan, announced on August 9, 2007. Since early 2006, DirecTV has repurchased about $5 billion worth of its common stock.

Earlier this month, CEO Chase Carey made a brave attempt at alleviating concern over the economic scenario, saying that the company was well positioned to weather a slowdown and the credit crisis because its customers were in the higher income brackets. Carey added that the impact of the credit and economic turmoil on the company would be "marginal at most."

On Jan. 23, Kaufman Bros upgraded DirecTV all the way to buy from hold. Analyst Todd Mitchell said in his note that the company would be able to "generate solid sub growth and financial gains with the strongest HD offering and the least exposure to an economic downturn." Later this year, the company is likely to achieve significant growth in free cash flow, Mitchell added.

Earlier in the month, Lehman Brothers upgraded its rating on DirecTV to overweight from equal weight, while raising the price target to $32 from $30. Analysts said that high-quality subs insulate the company against an economic downturn and competition. Also, Lehman expects DirecTV to be able to lower churn rates and programming costs this year. Mario Gabelli of Gamco Investors said he expects the company to progress from $600 million in debt to about $3.5 billion in cash in 2010. Shares could be worth between $40 and $45 in the next three years, Gabelli added.

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At the time of publication, Raznick had no positions in the stocks mentioned, 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.