To help boost the stock market and stimulate the economy, the federal government has eased restrictions on companies buying back their shares. For investors, company buybacks are a bullish sign: an academic study found that companies that repurchased their own shares outperformed similar companies by an average of 23 percentage points over the four years following program announcements between 1991 and 1996.
The greater the percentage of shares a company buys back, the better its stock usually fares, Therefore, companies where the number of shares outstanding falls by at least 3% from the prior year may be ready for price appreciation. Online, a great deal of buyback information is available. Just go to an Internet search engine and type in the words “stock buybacks.”