These tech stocks could be ‘ports in the storm’ during bear market, Deutsche Bank says
The tech crash of this year has caused the Nasdaq Composite to spiral down into a bearish market. This benchmark is down 25% from November’s record. Deutsche Bank says that there are still some internet companies which could make it through the coming year due to share repurchases. The firm looked at 28 companies in the S & P 500 that have market cap greater than $20 billion and have announced buybacks this year. In a note, Benjamin Black, research analyst, said that the group had outperformed index by 5% and 4% over three months. Deutsche also examined the most bearish market over the last 20 years. It lasted 409 days, from October 2007 to November 2008. During that time, there were 137 companies in the S & P 500 that announced incremental buybacks. This group outperformed both the index and S&P 500 by 3% in 2008 as well as 20% in 2009. Black explained that the group looked at names that could repurchase stock the most in the next year and that they might be ports of call in the market turmoil. Below are ten internet names included in Deutsche’s top 10. Alphabet & Match Group / Booking Holdings & eBay were identified by the firm as those best placed to benefit from buybacks. This will allow them to potentially exceed the market over the next 12 months. Google’s parent company authorized additional $70 million of repurchases in April. The current market capitalization of the repurchase program is 5%. Deutsche analysts predict that this number will increase to 7% with additional buybacks through 2020 and beyond. Match Group, a dating site operator, approved its first buyback for 12.5million shares last month. This represents 4.5% of the outstanding shares. Black stated that he considers this bullish news for the stock, and pointed out the Street forecasts Match’s repurchases to be 6% of the company’s current market capital through 2023. Black stated that eBay’s buyback ammunition is relative to its market capital the highest across all of the banks’ coverage. At the close of the quarter, eBay had $4.7bn in its buyback program. This represented 18% its market cap. Street analysts predict that the company will purchase shares equal to 7%. Travel booking operator Booking Holdings, meanwhile, is expected to complete the remainder of its $9.1 billion buyback program — representing 10% of its current market cap — over the next three years. Black stated that the company will also benefit from opening tailwinds.