Although stock buybacks have never been among our most preferred methods of returning capital to investors, stock repurchase plans can indicate to investors that a company’s management believes the ship is not taking on as much water as its share price might indicate. Following yesterday’s -5.6% slide in the DJIA, there could be more buyback announcements as companies try to put the brakes on selling.

One of our leading candidates for a buyback announcement is Cisco Systems, Inc. (NASDAQ: CSCO), which announces quarterly earnings tomorrow and is expected to post EPS of $0.38 on revenue of $10.98 billion. Cisco just initiated its first dividend, a paltry $0.12/share, and has spent more than $50 billion since 2004 on buybacks. These billions have not helped the share price, but buybacks appear to be Cisco’s weapon of choice against falling share prices. Don’t be surprised if tomorrow’s earnings announcement includes another stock repurchase.

Wal-Mart Stores Inc. (NYSE: WMT) has seen its share price fall by more than -6% since Friday. The company announced a $15 billion share repurchase plan in June that puts the company on track to return control to the Walton family any day now. The current opportunity to buy back even more shares at an even lower price may be too good to pass up.

Kohl’s Corp. (NYSE: KSS) authorized an increase in its repurchase plan to $3.5 billion last February. The company’s market cap at the time was $15.7 billion. Shares posted a new 52-week low yesterday and Kohl’s market cap has dropped to $12.15 billion.

Home Depot Inc. (NYSE: HD) announced in June a total repurchase plan worth $22.5 billion. At the time, the company’s shares had lost more than -3.5% year-to-date. Shares are down more than -15% year-to-date after yesterday’s debacle, and Home Depot is likely to speed up repurchases rather than commit more cash to its buyback plan.

Lowe’s Companies Inc. (NYSE: LOW) has had a difficult time closing its valuation gap with Home Depot. The company authorized a $5 billion share repurchase plan in February, when shares traded at around $23.00. Shares hit a new 52-week low yesterday. Lowe’s, like Home Depot, is unlikely to add more to its buyback plan, but it could speed up repurchases.

GameStop Corp. (NYSE: GME) has a $500 million share repurchase plan in place. The company reports earnings on August 18th and an additional $500 million addition to the buyback pool is not out of the question. Video game stocks have had a rough time recently, and GameStop’s price/book ratio is less than 1, making now a good time for the company to try to boost its valuation, given that it offers no dividend.

Dell Inc. (NASDAQ: DELL) has spent $1.6 billion of its authorized $2 billion buyback program. The company’s market cap has dropped by about -$4 billion since the end of June. Boosting its repurchase program doesn’t cost Dell much and looks good at the same time.

ConocoPhillips Corp. (NYSE: COP) boosted its dividend and announced a $10 billion buyback program in February. Faced with collapsing crude oil prices, a boost to the repurchase plan is not out of the question.

General Dynamics Corp. (NYSE: GD) authorized a share repurchase program for 10 million shares of stock in June. At the time, the program was estimated to be in the range of $750 million. At today’s share price it amounts to less than $600 million. Adding a few million more shares is essentially free and could give the company a PR boost.

General Electric Co. (NYSE: GE) still has more than $11 billion remaining in its stock repurchase authorization that was suspended in 2008 and restarted late last month. The company could decide to boost that figure back to its original authorization of $15 billion. That would just about cover the year-to-date drop in the stock.

For an ETF that focuses on companies buying back large amounts of stocks, there is the PowerShares Buyback Achievers (NYSE: PKW) ETF.  Its top holdings differ greatly from our list of companies here because it calculates its holdings based on the Mergent Buyback Achievers Index.

Paul Ausick

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