Historic “Buys”: A Just-Passed Bill Means These Four Companies Could Soar in Q4

America is facing a perfect storm…

This storm has been fed by a cheap stock market, new taxes, government spending and geopolitical tensions…

And while it’s already hitting many parts of the economy… it’s soon going to hit everywhere.

Many companies are building up their defenses by using a profitable – but controversial – strategy. Their stocks are undervalued thanks to the market’s headwinds, and this strategy helps protect their investors…

And they’re pulling the trigger right now because of a tax that the Biden administration slipped into the sham “Inflation Reduction Act.”

As of January 1, 2023, corporate share buybacks will come with a 1% excise tax.

That means we have a fantastic opportunity going into the end of this year.

Share buybacks have been critical to the stock market. They reduce the total assets of a business, so its return on assets and return on equity immediately improve with share buybacks. Reducing the number of shares also increases earnings per share (EPS) growth.

What’s more, if a business pays out the same amount of money total to shareholders annually in dividends and there are fewer shares floating around after a buyback, then each share will pay out a larger annual dividend.

Share buybacks, particularly when the market is weak, show that company management has confidence in their company’s future. That confidence, combined with fewer shares on the market, can cause share prices to surge.

So higher dividends, higher growth and share price growth are all on the table after a share buyback.

But what makes this opportunity urgent is the coming tax on buybacks at the start of next year…

We have a huge buying opportunity right now… And I’ve found four of the best buyback opportunities to invest in.

Lone Star Semiconductors

Dallas-based Texas Instruments (TXN) is best known for its high-end graphing calculators.

But Texas Instruments is actually a semiconductor company. Calculators are just one of its many products that range from semiconductors and chips to radiofrequency and microwave equipment.

And it’s set to be a leader in the American semiconductor industry thanks to its colossal new factory in Richardson, Texas, that just began production in September.

The Richardson facility offers more than 630,000 square feet of factory clean rooms and provides 15 miles of automated overhead delivery systems to seamlessly move product.

At full production, the plant will be capable of churning out 100 million chips every single day for applications ranging from renewable energy to electric vehicles (EVs).

The new factory will only help Texas Instruments to further solidify its position as a giant of the American technology industry and bring more semiconductor production stateside.

And the company certainly has the balance sheet to back up its position and its investment in the Richardson plant.

For the second quarter of 2022, revenue topped $5.2 billion, up 14% over revenue in the second quarter of 2021. Operating profits rose 23%, net income grew 19% and EPS grew 20% year over year.

That EPS growth was helped by Texas Instruments’ stock repurchase program. The company’s share repurchases have risen 643% in the past 12 months as part of Texas Instruments’ commitment to returning its colossal free cash flow generation to shareholders.

And it recently announced an additional $15 billion buyback of its common stock over time in addition to the $8.2 billion worth of repurchases it authorized at the end of June.

In that same vein, the company hiked its annualized dividend by 8% to $4.96 per share. 2022 marks the 19th straight year of dividend increases for the Dallas-based tech giant, putting it near Dividend Aristocrat territory.

Investing in Texas Instruments represents a bet on the future of American semiconductor production. And the company’s management is confident enough in that future to put $23 billion where its mouth is in share repurchases over the past six months.

That means you can be confident in your investment too.

Action to Take: Buy Texas Instruments (Nasdaq: TXN) at market.

Florida Man… ufacturing

Up next is St. Petersburg, Florida’s Jabil Inc. (JBL). Fueled by new EV sales in particular, Jabil has recorded some astounding fiscal fourth quarter and full-year 2022 results… and has reinvested much of its cash into its own shares.

In July 2022, the company authorized a $1 billion common stock share repurchase.

The company has a habit of returning money to shareholders that way. Since 2016, it has spent $2 billion to repurchase 63.6 million shares.

And Jabil pays a small dividend to sweeten the deal.

What’s more, Jabil’s balance sheet shows management has plenty of reasons to be optimistic about the company’s future.

For the fourth quarter of 2022, companywide net revenue increased 21.9%, total revenue shot up 14.3% and earnings climbed 50.7% – all compared with their values in the fourth quarter of the company’s fiscal 2021.

Full-year fiscal 2022 revenue topped $33.4 billion, with some of the fastest growth coming from the automotive and transportation part of the company’s diversified manufacturing portfolio. Revenue for that sector increased by nearly one-third, jumping from $2.2 billion in 2021 to $3.1 billion in 2022.

EV sales are set to only increase in the future, which bodes well for Jabil’s bottom line. In fact, an increase in semiconductor manufacturing does as well.

The company’s WaferMate automation platform has already seen adoption among some of the world’s top semiconductor manufacturers. Part of the reason scaling up semiconductor production is so difficult is the factories are so heavily automated.

By offering a set of ready-made automation tools that are already compatible with a number of different factories and capable of handling chip sizes from 50 millimeters to 450 millimeters and several chip shapes, Jabil is setting itself up to profit handsomely as companies throughout America seek to bring semiconductor production closer to home.

Jabil is the right company in the right place at the right time…

Which is precisely why it’s the perfect time for you to pick up a few shares yourself.

Action to Take: Buy Jabil Inc. (NYSE: JBL) at market.

America’s New Silicon Valley?

We’re returning to Texas for our final semiconductor company, Austin’s Cirrus Logic Inc. (CRUS).

Most of Cirrus’ product line has to do with audio products, amplifiers, converters and the like. But the company also offers various computer components, like fast charging, haptic feedback and sensing, interfaces, volume processors, etc.

But unlike Texas Instruments and Jabil, Cirrus doesn’t manufacture its own semiconductors. It’s what’s called a “fabless manufacturer.”

That means it outsources its chip production to other companies in order to lower costs.

And soon, Cirrus and companies like it will be able to buy semiconductors from the U.S. market, without major transport costs to get the semiconductors across the Pacific. So the company’s costs should go even lower, further boosting its astronomical revenue growth…

Cirrus’ revenue has surged 50% since 2019, totaling $1.78 billion for the company’s fiscal 2022. Non-GAAP (generally accepted accounting principles) EPS has shot up 161% from $2.64 per share to $6.90 per share over the same time frame.

Its operating profit margin has seen similar growth, climbing more than 10% over the past four years…

Finally, the company’s first quarter fiscal 2023 has clearly given Cirrus’ leadership even more reason to be optimistic…

For the first quarter of its fiscal 2023, Cirrus brought in $393.6 million in revenue, up 42% over revenue in the first quarter of 2022. The company’s gross profit margin came in at 51.5%, and cash grew by $10 million. Cash flow generation over the past five years came in at $1.3 billion.

With all that cash, management has announced a $500 million share repurchase program. And while the market is down, they’ll pick up shares on the cheap… And they won’t be taxed for it.

They know the future is looking bright for America’s new Silicon Valley, emerging around the Gulf of Mexico.

Action to Take: Buy Cirrus Logic Inc. (Nasdaq: CRUS) at market.

Big Buyback on the Block

It’s true that H&R Block Inc. (HRB) has nothing to do with America’s semiconductor industry. But it’s an All-American company based in Kansas City, Missouri, that has a commitment to returning money to shareholders and a solid, albeit seasonal, business.

The company is best known for its tax preparation products. And Biden’s new taxes are already making our tax code into an even more Byzantine mess than it already was.

More and more people will be looking to have professionals deal with the IRS, so they won’t make a mistake and get harassed by the 90,000-man army the Biden administration is turning the IRS into…

During the pandemic, H&R Block has seen considerable growth in the number of tax returns it prepares annually. Between 2019 and 2022, its annual number of returns prepared grew by 868,000 to 20.4 million.

Revenue has grown accordingly, surging 12% over the same time frame. EBITDA (earnings before interest, taxes, depreciation and amortization) also grew 12%, and EPS shot up by 47%. The company also grew its dividend by 7%, and its commitment to returning money to shareholders doesn’t stop there…

In its fiscal 2022, the company bought $550 million worth of its own shares, absorbing 13% of its total outstanding shares. What’s more, the company announced it would be spending $1.25 billion over the next few years to buy more of its shares between now and 2025.

And for 2023, H&R Block is expecting revenue, EBITDA and EPS to increase. All three of them, along with the amount of money the company returns to shareholders ($2.7 billion since 2016), are set to only grow as the increasingly complicated tax code becomes even more opaque and confusing to anyone who hasn’t spent years studying it…

And as the skills of those people who have studied it become more and more vital.

Action to Take: Buy H&R Block Inc. (NYSE: HRB) at market.

Batten Down the Hatches, Get Ready for the Storm…

Just about the only good thing to come out of the Inflation Reduction Act is a massive buying opportunity as companies scramble to pull the trigger on share buybacks.

Our best bet is to put our money in companies that are preparing for the future and that are committed to returning money to their shareholders and treating them well.

And the companies in this report are prime examples.