Stockpickr

Return to Article

Top 10 Warren Buffett Buyback Stocks

James Altucher

Warren Buffett, the CEO and largest shareholder of Berkshire Hathaway(BRK.A), is the third richest man in the world, and he achieved that status through savvy investing.

We at Stockpickr thought it would be interesting to look at those Buffett stocks that are also the subject of big company share repurchases. As we often highlight here, many stocks have successfully risen in price through company buybacks. So at Stockpickr.com, we have come up with the 10 Warren Buffett stocks with stock buyback programs.

When a company buys back its own stock, it reduces the number of shares outstanding and therefore increases the earnings per share. It also sends a signal to investors that the company has confidence in its business and that its own shares are the best investment for its surplus funds.

As an example, Wal-Mart(WMT) recently implemented a $15 billion stock buyback program. And we also saw that Buffett increased his position in the company. Wal-Mart recently announced a 49.1% quarterly increase in earnings on a 10% increase in revenue. The stock has a price-to-earnings (P/E) ratio of 14 and a P/E-to-growth (PEG) ratio of 1.1. The yield on the stock is 2%.

Wal-Mart shows up in the Bill and Hillary Clinton Portfolio, which lists the stocks held and recently liquidated by the Bill and Hillary Rodham Clinton blind trust. The Clintons also owned Biogen Idec(BIIB), which also recently announced a $3 billion buyback. The pharmaceutical company, which is working on developing a treatment for lymphoma, as well as for multiple sclerosis and psoriasis, has a P/E of 37 and a PEG of 1.8.

A second Buffett Buyback stock is Procter & Gamble(PG), which plans to buy back up to $30 billion in stock over the next three years. P&G reported a 19.5% increase in quarterly earnings on an 8% growth in revenue. The stock has a P/E of 21 and a PEG of 1.6, with a yield of 2.2%.

Procter & Gamble appears in Supermarket Stocks, a Stockpickr portfolio that also contains Safeway Stores(SWY), which offers a P/E of 16, a PEG of 1.5 and a yield of 0.9%.

Moody's(MCO) is another stock on the Buffett Buyback list. The corporate credit rating agency just implemented a new $2 billion buyback program that will begin after its current buyback plan is completed. The company bought back $500 million of its stock last quarter. Moody's has a P/E of 14, a PEG of 1.3 and a yield of 0.7%.

Moody's is part of another interesting Stockpickr portfolio called Risk-Averse Fast-Growing Underestimated Companies. Other companies in this portfolio include Forward Air(FWRD), a provider of transportation and logistics services that has a P/E of 23 and a PEG of 1.8, as well as Expeditors International of Washington(EXPD), another logistics and transportation company. Expeditors has a P/E of 38 and a PEG of 2.0.

There are several other stocks where you might have a savvy investor coupled with a buyback. Check out the entire list -- including Bank of America(BAC) -- at Warren Buffett Buyback Stocks portfolio at Stockpickr.com.