Jim Cramer Says Investors Should Check Share Count Before Buying A Stock: ‘You Want A Management That Agrees With You’

Benzinga Neuro | April 1, 2024

Responsive image

Jim Cramer highlighted the role of share count reduction behind more than half of the S&P 500 stocks achieving new 52-week highs in the first quarter.

What Happened: Cramer mentioned that a considerable number of companies have substantially cut their share count since 2019, an approach that has mostly flown under the radar, as reported by CNBC on Monday. This trend of share count reduction spans multiple sectors, including housing, retail, and technology.

“Check the share count before you buy a stock. You want a management that agrees with you, not one that thinks it can give away stock as compensation, often to throw you off the scent of adulterated earnings power,” he said.

Cramer cited examples of companies such as Lennar (NYSE:LEN) and Toll Brothers (NYSE:TOL) in the housing sector that have significantly reduced their share count. For example, Lennar’s outstanding shares have decreased to 276 million from 318 million five years ago, while Toll Brothers’ shares have dropped to 105 million from 145 million.

Similarly, retail companies like Best Buy (NYSE:BBY) and Dick’s Sporting Goods (NYSE:DKS) have also cut their share counts. Best Buy’s share count has reduced to 215 million from 264 million, and Dick’s Sporting Goods’ share count has shrunk to 80 million from 87.5 million.

See Also: Peter Schiff Warns Of Far More ‘Devastating Outcome’ Than 2008 Global Financial Crisis As He Slams Jerome Powell’s ‘Misguided’ Optimism

In the tech sector, Apple Inc. (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) have been repurchasing their stocks, leading to a decrease in their share counts. Apple’s shares have declined to 15.9 billion from 18.6 billion in 2019, while Microsoft’s share count has reduced to 7.43 billion from 7.6 billion.

Why It Matters: This trend of share count reduction comes in the wake of a predicted 15% surge in the S&P 500 by the end of 2024, as noted by Goldman Sachs. The exceptional performance of mega-cap tech stocks is expected to drive this growth.

Despite a slight decline in overall market sentiment as indicated by the CNN Money Fear and Greed index, U.S. stocks recorded gains in the last quarter.

Read Next: Dogecoin Mirrors 2018-2021 Patterns: Crypto Analyst Says ‘DOGE Could At The Very Beginning Of A Massive Parabolic Bull Run’

Image via Shutterstock

Engineered by Benzinga Neuro, Edited by
Pooja Rajkumari

The GPT-4-based Benzinga Neuro content generation system exploits the extensive Benzinga Ecosystem, including native data, APIs, and more to create comprehensive and timely stories for you.
Learn more.