Update - August 10, 2021

Gartner Proves Its Strength

Just a short update… as I’m currently on vacation with my family. I’m on a beautiful, small island deep in the Caribbean.

It’s good to get away.

But we can’t go too far… There’s important news to cover.

As you may have seen, Gartner (IT) released its latest figures last Tuesday. The numbers were good, and shares surged higher… going up 10% on the day.

The move gives you a gain of about 24% since I recommended the stock in June.

Sales were up last quarter. They jumped by 20% from the same time a year ago to $1.17 billion, just ahead of estimates. Profits per share surged 87% from a year ago… coming in at $2.24 and beating estimates by roughly $0.50.

But it was something a lot of investors likely missed that truly surprised the markets and forced the share price to rise to meet new expectations last week.

It is what I detailed when I recommended shares of Gartner… its big buyback plan. In that issue, I specifically mentioned the company’s $500 million addition to its existing buyback plan. It was the second boost of the year.

Here’s the key thing with all buybacks. It’s what I wrote in June…

Many share-repurchase programs never come to life or are in place only to cover up other dilutive action, but Gartner’s team is making good on its promise.

In April alone, the company grabbed $200 million worth of its own shares and permanently took them off the market. This creates a steady, reliable demand for shares.

There are companies that have buyback plans, and then there are companies that actually put such plans into motion.

Gartner is clearly the latter.

If you tuned into the company’s earnings call last week, you heard chief financial officer Craig Safian do a bit of bragging about the plan.

“We’ve repurchased over $1 billion worth of our stock through the first half of this year,” he said.

One billion bucks.

That’s big.

Better yet, it’s likely to continue.

The company has ample free cash flow and cash on hand, plus the balance sheet flexibility to make it happen. And, according to the call, we could soon see the buyback continue, along with some strategic merger-and-acquisition activity.

Safian made it clear that we’re likely to see some small-to-midsized acquisitions during the second half of the year.

It makes it clear why we added this stock to our Modern Asset Portfolio – particularly the buyback allocation within it.

Those buybacks, as I’ve written so many times, are adding big value.

If you don’t own shares of Gartner yet, they’re worth buying as long as the company is buying them.

And it definitely is.

It’s a good, strong play. The quick gains we’ve already made prove it.