Big Buybacks Announced: 3 Stocks Insiders Are Banking On

October 31, 2024 at 08:30 AM EDT

Money exchange stock buybacks

Whenever investors think of the factors that can make a stock go up or become more popular in the market, they typically refer to the announcement of a mega investor like Warren Buffett taking a new interest in a stock. These events do undoubtedly make a stock's price soar as a reaction; however, there are other participants worth watching.

These corporate insiders know a company's value better than any analyst or investor can since they run it and understand what is happening daily. Knowing this, investors should watch for new corporate buyback announcements since they typically suggest the stock being bought is considered cheap or at least is expected to go on a run in the near future.

Stocks reporting increased corporate buybacks today include names like United Airlines Holdings Inc. (NASDAQ: UAL), which represents the coming tailwinds in the transportation sector. Then there is the technology stock giant Microsoft Co. (NASDAQ: MSFT), which gives investors another potential run higher if and when inflation makes its way into the economy. Finally, TechnipFMC (NYSE: FTI) provides support for systems in the energy sector.

United Airlines Stock Primed for Double-Digit Upside Potential

Management at United Airlines knows that the stock might be severely undervalued today, even though it already trades at a new 52-week high and has delivered an impressive rally of 125% over the past 12 months. The reasoning behind the buybacks, then, has to be linked to tomorrow's economic expectations.

After approving up to $1.5 billion in stock buybacks, management is potentially betting on two things. First, oil prices have struggled to stay above a healthy uptrend, even though inflation pressures are building in some market dynamics today. Low oil prices help airlines keep their fuel costs low and expand their margins, also helping earnings.

This trend is what helped United Airlines deliver up to $3.33 in earnings per share (EPS) in its latest quarter, where the expectation was for only $3.1 in earnings. Analysts on Wall Street believe that United Airlines could keep this uptrend in earnings going, judging by some of the recent price targets set on the company today.

TD Cowen reiterated their Buy rating on United Airlines stock as of October 2024, this time placing a price target of up to $100 a share. To prove these analysts right, the stock would need to rally as much as 28.2% from where it trades today, not to mention a new high for the year.

Microsoft Stock Keeps Riding Technology, Sector Gains

This week, one of the technology sector’s biggest players reported strong earnings results: Alphabet Inc. (NASDAQ: GOOGL). Its stock rose by over 11% in a single day on the good news, which could spill over to Microsoft stock on its earnings.

Management knows this, so they approved up to $60 billion worth of stock buybacks for the year. But that’s not the only reason they wanted to accumulate more of their own stock. During rising markets, such as those investors see today in the S&P 500, stocks that offer stability and certainty will trade at a premium.

Microsoft’s business is reliant on subscription revenue, which makes it very stable and predictable in most cycles. For this reason, the market is willing to pay a price-to-earnings (P/E) ratio of up to 36.6x today, which would seem expensive to most investors.

However, there’s always a reason for a stock to become Expensive, and that is because it will be more popular and preferred by most market participants, so valuations are only getting ahead of the inevitable. Analysts at Truist Financial seemed to have no problem with how Microsoft is valued and traded today.

With a recent price target set to $600 a share, these analysts think Microsoft stock could rally by as much as 37.6% from today’s prices, another factor for investors to keep in mind.

TechnipFMC Stock Set to Benefit from Buffett's View on Oil Markets

After Warren Buffett recently bought up to 29% of Occidental Petroleum Co. (NYSE: OXY), markets became interested in oil stocks as a whole. Still, they’re not all made – or treated – equally. Those at the top of the value chain, those who support production and refining activity from lower in the chain, will likely get paid first.

This explains TechnipFMC management's hurried approval of up to $1 billion worth of stock buybacks, knowing that the company will see a higher valuation on every uptick oil prices make in the coming months. It would also explain the sudden price target boosts set by Wall Street analysts recently.

Those at Barclays joined Susquehanna and TD Cowen by placing a $37 a share valuation on TechnipFMC stock today. This would call for a massive upside of up to 41% from where the stock trades today. These weren’t the only participants excited about the stock’s potential future; institutional buyers also shared these bullish views.

Vestor Capital boosted its holdings in TechnipFMC stock by as much as 31.6% in late October 2024, bringing its net investment to $15.7 million today.