Boost your portfolio with buyback stocks, Wolfe Research says

Wolfe Research Highlights Buyback Stocks as Reliable Growth Opportunity for Investors

Investing in the stock market can feel a lot like riding a roller coaster—lots of ups and downs, and you want to find the safest seat. When markets get bumpy, some experts say that stocks with a history of buybacks can help steady your ride.

Why Buybacks Matter for Investors

Stock buybacks happen when a company uses its own money to buy its shares back from the market. This can be good for investors because it usually means the company is confident in its future, and it can make each remaining share worth a little more.

Wolfe Research points out that companies with strong buyback programs often do better during tough times, like recessions. These companies can help make your portfolio less risky when the market gets shaky.

Bullish Case: The Upside of Buyback Stocks

  • Steady Track Records: Companies like Lowe’s and Automatic Data Processing (ADP) have bought back shares for at least 10 years straight, showing long-term confidence.
  • Dividends Too: Many of these companies also pay dividends, rewarding investors with regular cash. Some, like Lowe’s, are “Dividend Aristocrats,” meaning they’ve raised dividends for 25+ years.
  • Analyst Optimism: For example, Mizuho thinks Lowe’s could see its stock price rise 25% as home improvement demand recovers.
  • Defensive Play: According to a Morningstar study, companies with steady buybacks tend to outperform during recessions, giving investors a safer option in stormy markets.

Bearish Case: Risks to Watch

  • Market Worries: Even buyback stars aren’t immune to market drops. Lowe’s shares are down over 4% this year, and ADP is down more than 20% in 2026.
  • Industry Challenges: ADP faces concerns about new technology like artificial intelligence possibly disrupting its business, causing analysts to be cautious.
  • Buybacks Aren’t Magic: Sometimes, companies buy back shares for the wrong reasons, like trying to boost short-term stock prices instead of investing for long-term growth.
  • Mixed Analyst Views: Not all experts agree. For Lowe’s, analysts are split between “buy” and “hold.” For ADP, most say to “hold” rather than “buy.”
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Other Notable Buyback Stocks

Besides Lowe’s and ADP, Wolfe’s list includes Colgate-Palmolive, Illinois Tool Works, AO Smith, and Mondelez. These companies have all shown a strong commitment to buying back their shares while often paying steady dividends.

Historical Context: Buybacks in Tough Times

During the 2008 financial crisis, companies with healthy buyback programs generally lost less value than the broader market. According to research from the National Bureau of Economic Research, buybacks can signal financial strength and management’s belief in the company’s future.

Investor Takeaway

  • Consider adding companies with a long record of buybacks and rising dividends to your portfolio for more stability in rough markets.
  • Don’t just chase buybacks—look for strong businesses with solid long-term prospects.
  • Watch for changing risks, like new technology or economic slowdowns, that could hurt even well-run companies.
  • Balance your investments with a mix of defensive (like buyback stocks) and growth-oriented picks for better all-weather performance.
  • Stay updated on analyst ratings and overall market trends before making big moves.

For the full original report, see CNBC

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