These 2025 Outperformers Just Unlocked Buyback FuelWritten by Leo Miller
Two stocks that are greatly outperforming the market in 2025 just signaled further confidence. They just announced big-time share buyback authorizations, providing both repurchase capacity equal to 10% or more of their market capitalizations. Let’s dive into the journeys of these two names below and work to gain an understanding of their potential going forward.
DLTR Celebrates Family Dollar Divorce With Billions in Buybacks First up is Dollar Tree (NASDAQ: DLTR). In 2025, shares of Dollar Tree are up approximately 46%, far outpacing the approximately 7% return of the S&P 500. One reason markets feel better about this company is that it is divesting a large portion of its business. In late March, Dollar Tree announced the sale of its Family Dollar stores.
Family Dollar stores have consistently underperformed Dollar Tree stores, dragging down the overall company. Since first announcing the deal, shares are up around 52%. Notably, the deal officially closed in July. Dollar Tree also posted same-store sales growth of 5.4% last quarter, which is by far its highest figure over the last five quarters.
On July 9, the consumer staples stock announced it had “replenished” its buyback authority to $2.5 billion. This comes as the firm had nearly exhausted its previous $2.5 billion authorization from Sept. 2021. This is equal to just under 11% of the firm’s approximately $22.8 billion market capitalization.
Over the past three years, Dollar Tree has averaged quarterly buyback spending of around $204 million. Generally, buyback spending per quarter hasn’t wavered much, whether shares are rising or falling. However, last quarter saw a significant spike in spending as shares surged.
It's fair to assume the company could exhaust its current capacity over a relatively reasonable timeline of three years. Current prices could generate a solid annual buyback yield of around 3.7%. This would be a nice boon for investors, as the stock offers no dividend.
The MarketBeat consensus price target on Dollar Tree is just over $90, implying 17% downside in shares. However, analysts at JP Morgan Chase & Co. still see slight upside with their recent $111 price target. Overall, the data suggest that Dollar Tree’s 2025 run looks stretched. However, the longer-term outlook for the stock is likely more positive.
The company continues the process of converting stores to its MultiPrice 3.0 format, which is so far outperforming other formats. This, combined with the Family Dollar sale, could lead to continued appreciation in the long term.
AGCO: 19% Run Gets Coupled With 12% Buyback Capacity Our other outperformer and buyback booster is AGCO (NYSE: AGCO). In 2025, the stock provided a total return of over 19%. This outpaces not only the S&P 500 but also AGCO's industrials sector. The industrials sector is the best performing sector of 2025, returning around 15%. The company’s last earnings report on May 1 really kicked off the surge, with shares up around 31% since.
The agricultural equipment provider saw sales fall 30%. However, the company handily beat estimates on adjusted EPS and maintained its guidance. The firm believes it can weather tariff impacts better than many analysts expected.
On July 9, AGCO announced a new $1 billion share buyback program. This equates to approximately 12% of the firm’s $8.3 billion market capitalization. Over the past three years, the company has averaged quarterly buyback spending of around $12 million. However, its lack of buyback spending has been mainly due to Tractors and Farm Equipment Limited (TAFE) owning a large stake in the firm.
The company has resolved disputes with TAFE, and its ownership percentage is now capped. This makes buybacks an effective use of capital going forward, although it is difficult to determine the pace at which they will use it, with little historical data available.
The MarketBeat consensus price target on the stock is $105, implying 5% downside. However, JP Morgan & Chase Co.’s $130 target, released on July 10, indicates that upside is still in play. The company’s ability to effectively manage tariffs will be key to achieving further gains. A United States and European Union trade deal could also be a significant positive catalyst.
Buybacks Could Help DLTR and ACGO’s Gains Persist Overall, the new buyback programs these two firms have announced mean they could substantially lower their share counts.
Doing so could add a notable tailwind to their adjusted earnings per share (EPS), providing support for a continued rally. |
