Buyback Bets: Tivo and Wipro

09/05/2014 9:00 am EST


David Fried

Editor, The Buyback Letter

Our Buyback Premium Portfolio is beating the S&P 500 by more than 103% since its inception in 2000, explains David Fried. Here, the editor of The Buyback Letter highlights a pair of new buy ideas: a digital TV play and an IT consulting firm.

TiVo, Inc. (TIVO)

If you watch TV, you probably know TiVo, Inc. The company developed the first commercially available digital video recorder (DVR), so every time you pause a live TV program, skip past the commercials, or automatically record a series, you've got TiVo to thank.

Let's pause to thank TiVo for forever changing the home-entertainment game. TiVo, which supplanted the VCR in homes, now offers the TiVo service and TiVo DVRs directly to consumers online and through third-party retailers.

TiVo also distributes its technology and services through cable, satellite, and broadcasting companies. It's a business that not only made people's lives easier, but upended industries in the process.

The company just made a deal with Canadian cable TV company Cogeco Cable to roll out a multi-screen TiVo DVR to its 800,000 cable subscribers by mid-2015. It's TiVo's first deal with a Canadian pay-TV provider. Analysts hint this will be the first of a spate of such deals.

Analysts praise the company for robust revenue growth, increase in stock price during the past year, and notable return on equity. TIVO has reduced shares outstanding by 9.27% in the past 12 months.

Wipro, Ltd. (WIT)

Wipro is a leading IT, consulting, and outsourcing company with 147,000 employees serving clients in 175+ cities across six continents.

The company posted revenues of $7.3 billion for the financial year ended March 31, 2014.

Q1, which ended June 30, had total revenues increasing 14% year-over-year, net income increasing 30% year-over-year, and IT services revenue increasing 9.6% year-over-year. IT services operating margins came in at 22.8%.

Analysts praise it for strengths in revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, increase in net income, and reasonable valuation levels. WIT has reduced shares outstanding by 10.67% in the past 12 months.

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