So far, 2025 has been a volatile year for the market. The S&P 500 just went into a slight negative territory while the TSX remains flat. Investors have been facing all kinds of headlines ranging from tariffs to a weak economy. As a result, it is understandable that investors are looking for companies that are well-positioned for the current environment.

We think companies that are repurchasing shares aggressively, as a group, could help investors not only navigate through the volatility but also take advantage of it. The purpose of a share buyback is to provide investors who want to sell shares with the necessary liquidity as well as a decent exit price. At the same time, it also rewards investors who choose to stay invested in the company by allowing them to own more stake in the company percentage-wise and increasing earnings per share (EPS), as there are fewer shares outstanding to be divided for net income. Therefore, mathematically speaking, the lower the share price, the more shares a company can acquire. For example:

Scenario 1: Company A spent $100 million on share buyback at the current share price of $10. Company A can retire 10 million shares

Scenario 2: Company A also spent $100 million on share buyback, but due to macro uncertainty, the share price dropped to $8. Therefore, Company A can retire 12.5 million shares.

Given that if the fundamentals of the company remain unchanged. Volatility could be a friend of investors, as it allows the company to repurchase more shares with the same dollars invested. Below we have screened for companies with the following criteria:

• Repurchased shares of more than 5% of the market cap in the last twelve months
• Market cap larger than $100 million
• Net debt to EBITDA ratio below 3.0x
• Positive 3-year revenue compounded annual growth rate (CAGR)

The criteria above reflect companies that have repurchased their shares for cancellation of at least 5% of the shares outstanding within the trailing twelve-month period. We believe 5% is the threshold, as a consistent 5% reduction in share count could make a difference in terms of value creation over a multi-year period. Share buybacks also signal a few things: 1) Management believes shares are currently undervalued and is disciplined in allocating capital to unlock value through a tax-efficient manner 2) As mentioned earlier, it is psychologically comfortable for investors to continue owning the stock when it goes down, as the lower the share price drops, the more shares the company can repurchase given the same amount of dollars spent (given that the long-term fundamentals remain solid).

In addition, having a conservative debt level and a healthy financial position also allows the company to play offence in an uncertain environment. As usual, we prefer companies that are over $50 million in market cap, as these companies have proven themselves to be more mature, self-sustainable entities.

We think there are some names within the list that look promising for members to do more in-depth research, such as Andlauer Healthcare Group (AND), Imperial Oil Limited (IMO), and SECURE Waste Infrastructure (SES).

It is critical to note that not all share buybacks are created equally. In fact, it only matters if the company remains a strong business five or ten years from now. What really matters is the company’s terminal value. If the business faces a secular decline with the risk of going out of business (due to technology disruption, bankruptcy, etc.). Therefore, it does not really matter how many shares the company can buy back if the value of the company is zero ten years from now. Share buyback can act as a catalyst to unlock value, but the investment thesis can’t be solely based on it.

Lastly, these companies on the list are not recommendations, but rather a starting point that helps investors generate potential investment ideas.

Unlock the Power of Informed Investing with 5i Research!

DIY investing doesn't have to mean going it alone. At 5i Research, we're your trusted partner in navigating the stock market. Our platform offers comprehensive stock and market research, empowering you to make smart investment decisions. 

• Investor Q&A: Have burning questions? Get answers from our team of experts and fellow investors in our dedicated Q&A section.
• Research Reports: With over 60 meticulously researched Canadian stocks, our reports offer in-depth analysis, giving you the confidence to invest wisely. 
• Model Portfolios, Alerts, Forums, Portfolio Tracking, and Much More...

Take Care,

Disclosure: The analyst(s) responsible for this report do not have a financial or other interest in the securities mentioned.