Texas Pacific Land Trust (TPL), EMC Corporation (EMC), NetApp Inc. (NTAP): Buybacks Mean Better Times Ahead for These Stocks

The company increased the size of its buyback program to $6 billion, which will be carried out through 2015. EMC Corporation (NYSE:EMC) also intends to change its capital structure to include more debt without affecting its strong investment grade profile. This will be beneficial in taking advantage of lower interest rates as its debt equity ratio currently stands at a mere 0.07. Forward price earnings multiple of 11.8 indicates the stock is not expensive.

NetApp’s attractive valuation

Similarly, NetApp Inc. (NASDAQ:NTAP) is a solid play available at an attractive valuation of 12.2 times its future earnings. The company’s latest quarterly results were ahead of Street expectations, following which analysts raised their target prices on the stock. NetApp had a net profit margin of 10.1% in the most recent quarter and a forward price earnings ratio of 12.2. NetApp Inc. (NASDAQ:NTAP)’s price target was raised to $45 from $39 by analysts at Piper Jaffray.

Another important factor in boosting the price target for the stock by analysts is the company’s bigger and aggressive share buyback plan. The company now plans to repurchase shares worth $3 billion over the next 12 months. On the profitability front, the decision to eliminate 900 jobs in coming months would help. This has been complemented with the newly implemented quarterly dividend of $0.15 per share. This flurry of shareholder friendly decisions, coming under pressure from activist shareholder Elliott Management, has the potential to take the stock higher.

Foolish bottom line

Overall, the companies represent a healthy variety of robust business models but given its simplicity and future earnings visibility, Texas Pacific Land Trust (NYSE:TPL) appears to be a good pick. EMC Corporation (NYSE:EMC) and  NetApp Inc. (NASDAQ:NTAP), while attractive, may witness a correction with wider markets.

Jacob Wolinsky has no position in any stocks mentioned. The Motley Fool owns shares of EMC.

The article Buybacks Mean Better Times Ahead for These Stocks originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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