Online Buybacks

03/24/2016 7:00 am EST

Focus: STOCKS

David Fried

Editor, The Buyback Letter

David Fried, Editor of The Buyback Letter, is an industry-leading expert in analyzing stocks that are undergoing buyback and share repurchase programs. Here, he highlights two new buys—an online gaming play and an online merchant.

We last bought Groupon (GRPN) just a couple of months ago, in December 2015, and sold it a month later for a quick 7.15% gain.

The online marketplace offers discounts on restaurants, vacations, electronics, fashion, beauty, home furnishings and other goods, both locally and around the world.

From the perspective of a business, it helps them attract, retain and interact with customers.

Alibaba (BABA), China's biggest online commerce company, bought $33 million shares (a 5.6% stake), making it the fourth-largest investor in Groupon.

Under new chief executive Rich Williams, who joined Groupon in 2011 from Amazon (AMZN), Groupon plans a big $200 million marketing push in 2016.

He's working on restructuring, with a three-pronged strategy emphasizing international growth, shopping and marketing initiatives.

Fourth quarter sales and earnings beat analyst estimates. IBM (IBM) hit it with a recent patent-infringement lawsuit; those lawsuits are common in the tech industry.

Meanwhile, management has reduced shares the outstanding by 13.14% in the last 12 months.

Zynga (ZNGA) develops and markets social video games. It was founded in 2007 and rose to prominence with games built for play on social media sites.

It had a virtual monopoly on early Facebook (FB) gaming with FarmVille, CityVille, Words With Friends and Zynga Poker.

It went public in 2011, and more recently has shifted its focus to social game development in the mobile sphere, moving away from its reliance on Facebook.

Zynga also hit the restart button in the executive ranks. Wall Street is cheering a new industry-veteran CEO; Frank Gibeau previously turned around the mobile division at Electronic Arts (EA), so expectations are that he can do the same here. 

In the meantime, ZNGA has reduced shares its outstanding shares by 5.34% in the past 12 months.

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By David Fried, Editor of The Buyback Letter

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