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With support from the Magnificent 7, S&P 500 stock buybacks could return in 2024, according to Goldman Sachs. The company expects S&P 500 stocks to buy back $925 billion worth of its own stock this year, an increase of 13% from a year ago. This trend is expected to increase by another 16% in 2025, reaching over $1 trillion by 2025. The move comes after S&P 500 stock buybacks fell 14% in 2023 due to little earnings growth, high cost of capital and macro concerns, according to a report on Wednesday. . Comments from Goldman strategists David Costin and Cormac Connors. When companies buy their own stock, the overall number of shares in the market decreases. This effectively increases earnings per share, creating more value for existing shareholders. Stock buybacks could increase this year as supercap tech companies report better-than-expected profits. The Magnificent Seven, including Alphabet, Amazon, Apple, Metaplatform, Microsoft, Nvidia, and Tesla, accounted for 26% of S&P 500 buybacks in 2023. With the exception of Amazon and Tesla, these companies have bought back their S&P 500 shares. In the fourth quarter, Goldman discovered. Stock buybacks can also boost company stock prices. “In recent months, investors have rewarded companies more for their share buybacks than for other uses of cash,” the company said. In fact, Goldman’s stock buyback basket has outperformed the S&P 500 by 4 percentage points since the start of the fourth quarter of 2023. See below for some of the stocks in Goldman’s buyback basket and where analysts think they’ll go next. Meta was added to Goldman’s stock buyback basket last fall. The company recently expanded its stock repurchase program by $50 billion. As of December 31, 2023, Meta had $30.93 billion in authorized shares available for repurchase. The company’s stock price has increased nearly 45% since the beginning of the year. According to LSEG, 53 out of 62 analysts covering the stock rate it a buy. However, the consensus price target suggests the stock could fall about 1% from current levels. Another of his Magnificent 7 members on the META YTD Mountain Meta Platform (2024) list is Apple. The company announced it spent nearly $27 billion on dividends and stock buybacks during its fiscal first quarter. The iPhone maker’s stock price is expected to decline by 12% in 2024, but the majority of analysts remain optimistic about the stock. According to LSEG, nearly two-thirds of analysts covering Apple rate it a “buy” or “strong buy,” with an average price target suggesting an 18% upside from here. That’s what it means. Oil companies Marathon Oil and Marathon Petroleum are also among the companies Goldman has named as candidates for stock buybacks. Last October, Marathon Petroleum approved a $5 billion share buyback, expanding from its previous approval, which had $4.3 billion remaining at the end of September. According to LSEG, the energy company’s stock price will rise 20% in 2024. However, analysts’ price targets suggest the stock could fall about 2% from here. Meanwhile, Marathon Oil has underperformed the broader market this year, gaining just 2.2% compared to the S&P 500’s rise of more than 8%. The company repurchased more than $1 billion of its own stock in 2023. MPC MRO YTD Mountain Marathon Petroleum and Marathon Oil in 2024
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