I cringe when I hear statements like "real estate is always the best investment" or "stocks are always the best investment". At the right price a piece of real estate can be a good investment, while at the wrong price it could be a disastrous investment. The same applies to stocks.
One of the absolute statements that I have heard in the past year is that stock buybacks are value destroying. The reason is that so many companies that bought back stock went bankrupt as a result or have been forced to issue new stock at much lower levels.
If a company takes on leverage to buy back their stock or buys back an overvalued stock than indeed it is value destroying. However, if a company is sitting on a lot of cash, is conservatively capitalized and the stock is cheap than a buyback adds value. It is the most efficient way to return cash to shareholders as it is tax free, unlike dividends.
I bring this up because Amgen announced a large buyback this week. The company has already bought back over 6% of its shares outstanding this year and still has nearly $7 billion in net cash. The stock trade at less than ten times earning net of cash. Needless to say, I believe it is the right move.