The Inflation Reduction Act is a sham. It does virtually nothing to reduce rising prices… as evidenced by the Fed’s latest desperate moves.
It’s merely a smattering of half-cocked political pandering.
The bill puts hundreds of billions into green energy. It slashes the profit potential in the healthcare sector (the same profit potential that has incentivized Americans to make this the global home of lifesaving innovation). And it increases corporate taxes.
We’ve seen less smoke and mirrors at carnival sideshows.
But there’s one thing in the bill that investors should pay attention to.
It might make you some money… starting in just a few weeks.
We’ve mentioned it before. But now a bevy of companies are doing exactly what we predicted.
They’re lining up to get ahead of an important new tax provision.
You see, starting on January 1, 2023, corporate buybacks will come with a 1% excise tax.
With many buyback plans stretching well above the billion-dollar mark… it’s a big deal. Tens of millions of dollars will be sucked out of corporate coffers.
Naturally, companies have responded by doing what they do best: maximizing the value of their assets.
Several companies have announced aggressive buyback plans. Last week, Johnson & Johnson (JNJ) announced a $5 billion plan. Just days ago, Starbucks (SBUX) announced a $20 billion plan. And on September 14, Comcast (CMCSA) doubled its plan to $20 billion.
That’s a lot of money.
Much of it will flow into stocks during the last three months of the year… as corporate treasurers rush to get ahead of Washington’s latest tax.
It means a handful of stocks are likely to have a solid end of the year, despite the market’s massive headwinds.
Here’s a list of some of the biggest buyback announcements we’ve seen in recent days.
- Texas Instruments (TXN) – $15 billion
- Corteva (CTVA) – $2 billion
- Synopsys (SNPS) – $1.5 billion
- Salesforce (CRM) – $10 billion
- Home Depot (HD) – $15 billion
- Paycom Software (PAYC) – $1.1 billion
- Diamondback Energy (FANG) – $4 billion
All told, that’s nearly $50 billion worth of buybacks. For Washington, it could mean a half-a-billion-dollar payday… a major erosion of shareholder value.
Corporate executives know the game.
They’re looking at a December 31 deadline and a dirt-cheap stock market. It’s an ideal time for them to pour fuel on the fire and prop up share prices.
Fourth quarter buyback activity will be strong… perhaps historically strong.
Investors would be wise to search out the companies doing the most buying. Their share prices will rise because of the increased demand.
The next few weeks could treat buyback stocks quite nicely.
This article was originally published on this site