Among 14 information technology companies on the list, free cash flow per share rose 8.8% on average over the past 12 months, including an increase of about 29% for Apple.
“The technology sector certainly has a lot of excess cash flow and will lead the way in share repurchase activity and dividend growth,” said David Bianco, chief U.S. equity strategist for Deutsche Bank Securities Inc. in New York.
Apple is under pressure from investors including David Einhorn’s Greenlight Capital Inc. to put more of its $137.1 billion in cash and marketable securities to use. Greenlight is urging Apple to issue high-yielding preferred stock to carve out more cash for investors. Apple, whose shares have declined 38% from a Sept. 19 peak of $702.10, has said it’s considering buybacks or a higher dividend. The stock dropped 0.7% to $432.55 at 10:05 a.m. in New York.
“I believe Apple is buying back stock at this level,” said Laurence Balter, chief market strategist for Oracle Investment Research in Fox Island, Washington. “All of the stars are aligned: The stock is very cheap and they have the cash.” He rates Apple as strong buy.
The iPhone maker in March 2012 authorized the repurchase of $10 billion in shares over three years starting Sept. 30.
Apple’s cash and marketable securities led the list at 69.9% of assets, just ahead of Analog Devices at 69.7%. Analog Devices had more than $500 million left for buybacks, Chief Financial Officer David Zinsner told analysts in February.
“My model assumes they do buybacks in the coming quarters,” spurred by a 14.6% increase in free cash flow annually through 2014, Shawn Webster, an analyst at Macquarie Capital USA Inc. in New York, said of Analog Devices.
Analog Devices’ shares increased 0.6% to $45.38 today, extending its year-to-date gain to 7.9%.
Steve Dowling, a spokesman for Cupertino, California-based Apple, and Ali Husain, a spokesman for Norwood, Massachusetts- based Analog Devices, declined to comment.
Garmin, the maker of navigation and communications devices, had cash and marketable securities of about 60% of assets, ranking first on that basis among four consumer- discretionary stocks. As a sector, cash among those companies averaged about 23% of assets. Its price-earnings ratio also is about 50% cheaper than its peers in the sector.
In February, Garmin directors authorized the repurchase of $300 million of shares. The Schaffhausen, Switzerland-based company declined further comment, Ted Gartner, a spokesman, said yesterday by e-mail.
“I expect that Garmin will exercise a meaningful portion of its approved buyback before the end of 2013,” James Faucette, an analyst at Pacific Crest Securities in Portland, said in an April 9 e-mail. He has a rating of outperform, the equivalent of a buy, on the shares, which have fallen about 16% so far this year.