Sirius XM Radio Inc (SIRI), Apple Inc. (AAPL): Two Buyback Programs to Create Long-Term Gains

Just like Sirius XM Radio Inc (NASDAQ:SIRI), when you take into consideration the number of shares that are already owned by institutions — Apple’s buyback will eliminate much of its remaining float – more than 30% over three years.

Apple Inc. (NASDAQ:AAPL) is trading at just 7 times earnings minus cash, which is much cheaper than the technology index of 15 times earnings. Therefore, it makes sense that Apple would be aggressive in buying back shares right now. The company has plans to spend $60 billion by the end of 2015 – but it doesn’t necessarily mean that the $60 billion will be split equally. As a result, with the stock being so cheap, I think Apple will buyback its own stock with authority — and is a great investment opportunity.

Final Thoughts

Over the last two years we have seen companies such as Seagate Technologies create a great deal of value by reinvesting capital with buybacks. With interest rates being so low and the benefit of reducing share counts being so high, we are seeing more and more companies elect to buy back stock.

Apple and Sirius XM Radio Inc (NASDAQ:SIRI) look to present a rare opportunity in this market. Sirius XM’s $2 billion buyback program is not excessive – but with its limited float the impact of the buyback becomes particularly attractive.

Apple Inc. (NASDAQ:AAPL) is breaking all the records with its capital return plan, which I believe will greatly change the sentiment surrounding this cheap company.

Overall, both companies have created support for their stock, and should see significant gains due to aggressive buyback plans in the quarters that lie ahead.

The article 2 Buyback Programs to Create Long-Term Gains originally appeared on Fool.com and is written by Brian Nichols.

Brian Nichols owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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