Beyond the two stocks we discuss below, there were several major buyback announcements during the last month, including Netflix's (NFLX) $15 billion additional buyback, which accounts for 4% of its market cap, GE Aerospace's (GE) $7 billion buyback representing 3% of its market cap at the time of announcement, and HCA Healthcare's (HCA) significant $10 billion buyback, making up 12% of its market cap. In just the first month of this year, 20 companies announced buybacks worth $1 billion and more.

• Twilio's turnaround under its new CEO has been remarkable, with shares up over 100% in the past year.
• The company projects GAAP operating profitability in 2025 and aims to generate over $3 billion in cumulative free cash flow during the next three years.
• Twilio maintains a strong net cash position and has been aggressively buying back shares, retiring 15% of its stock over the last six quarters.
• A leaner cost structure, with a 40% headcount reduction since Q3'22 and an 8% drop in stock-based compensation over two years, has cut losses, strengthened profitability, and generated strong free cash flow.
• Twilio is gaining traction among AI startups, with emerging AI companies increasingly selecting its platform for customer engagement solutions.
• International expansion—currently representing less than 10% of its total addressable market—opens up a largely under-penetrated opportunity that could serve as a powerful growth catalyst over time.

Prior to that, he held key roles as Twilio's COO and CFO. Before joining Twilio, Shipchandler spent 22 years at GE, holding leadership positions in Industrial Internet, Corporate Audit, and Aviation, across the U.S., Middle East, and Singapore. He holds a Bachelor of Arts from Indiana University, Bloomington, and currently serves on the boards of Smartsheet and Ethos. Twilio's CFO Aidan Viggiano also spent 18 years at GE, joined Twilio in 2019 and was promoted to the role of CFO in 2023.  

Twilio does not pay a dividend, opting instead for share repurchases to deliver shareholder value. The company plans to return an annual average of 50% of its free cash flow from 2025 to 2027. Over the past six quarters, Twilio has reduced its share count by 15%, completing $3 billion in share repurchases since Q1 2023. The company recently announced a new $2 billion buyback program through the end of 2027, representing around 11.5% of its market cap at the time of announcement.

Twilio's strong balance sheet, with nearly 10% of its market cap in cash, combined with an aggressive share repurchase strategy, underscores both its financial strength and ability to be shareholder friendly. The company's accelerating revenue growth, the CEO's solid execution over the past year, and its path to breakeven create a compelling case for further upside. Their recent analyst day painted a picture of revenue growth that prompted 23 analysts to revise their earnings expectations upward. This is a highly volatile stock that brings with it significant risk of mean-reversion. With the ouster of the founder/CEO after his shares lost their super-voting rights in 2023, in some ways Twilio might be setting itself up to become a potential acquisition candidate.  

With over 160 years of industry experience, DNOW Inc. (DNOW) has established itself as a premier global distributor serving the oil & gas, industrial, and energy sectors, forming a critical link from drilling to distribution. Operating under the DistributionNOW brand, the company maintains a vast network of 165+ locations worldwide. Expanding through both organic growth and acquisitions, the company has a global footprint, with distribution centres, warehouses, and customer service locations across North America, Latin America, Europe, the Middle East, and the Asia-Pacific region. The US is the major contributor of revenue with 79%, followed by Canada with 11%.

• DNOW serves as a supplier of maintenance, repair, and operations (MRO) products, safety equipment, and engineered solutions with a catalogue of 300,000+ SKUs (Stock Keeping Units).
• The company is focused on expanding beyond traditional oil & gas markets to capture opportunities in industrial, renewable, and energy transition sectors, thus mitigating the impact of fluctuations in the cyclical energy industry.
• Debt-free balance sheet and a net cash position of $217 million positions the company to invest in strategic growth opportunities.
• Active buybacks including the recently approved $160 million share repurchase indicate shareholder friendly capital allocation.

DNOW is a one-stop provider of critical products and supply chain solutions that support the upstream, midstream, and downstream energy sectors, as well as various industrial markets. The company's offerings include MRO supplies, pipes, valves, fittings, electrical components, and pumping solutions. It also provides modular process, production, measurement, and control systems. Beyond physical products, DNOW offers digital procurement tools and inventory management services to optimize supply chain operations for industrial clients.

• Expanding Market Reach – DNOW continues to broaden its presence in industrial and energy markets beyond traditional oil & gas.
• Digital Transformation – Investing in digital solutions like eCommerce and automation to enhance customer engagement.
• M&A Strategy – Over the past 9 years, it has integrated 11 businesses to produce an outstanding pump distribution, rental and service business, combined with engineering, design and fabrication of process production and measurement equipment, which naturally complements its U.S. energy centric business.

DNOW remains optimistic about midstream growth. Management sees this sector as a key focus due to its low servicing costs and high-volume transaction potential. While margins are slightly lower, strong supplier relationships and product access make midstream a natural extension of DNOW's upstream business. Notably, the midstream segment now accounts for approximately 20% of DNOW's total revenue and the company aims to drive further growth and profitability in 2025 from this sector.

With a debt-free balance sheet and a net cash position of $217 million, DNOW is well-equipped to pursue strategic growth opportunities while delivering value to shareholders. In the third quarter, DNOW generated an additional $72 million in free cash flow, bringing the trailing 12-month total to $273 million. This performance was driven by record growth in U.S. Process Solutions, contributions from recent acquisitions, and efficient inventory management—all achieved despite a challenging oil and gas environment, lower commodity prices, and ongoing industry consolidation.

DNOW does not pay dividends but focuses on share repurchases to increase shareholder value. It recently doubled its share repurchase program to $160 million, following the successful completion of its $80 million inaugural buyback, originally authorized through 2024. The new program represents around 11% of its market cap at announcement. Over the past two years, the company has steadily reduced its shares outstanding by nearly 4%, demonstrating its disciplined approach to capital allocation

DNOW operates in the highly competitive industrial distribution sector, competing with companies like MRC Global Inc. (MRC) and DXP Enterprises, Inc. (DXPE). While DNOW has outpaced the S&P 500 over the past year, its performance has been moderate compared to its peers. However, it stands out with the best margins and the strongest balance sheet, managing to achieve a net income margin of 8.7% despite a low gross margin of 22.87%. With a forward P/E of 20.68 and forward EV/EBITDA of 8.91, DNOW appears undervalued compared to its peers. This discount may stem from market concerns over its relatively low year-over-year revenue growth, despite its financial strength.

DNOW remains a key player in energy and industrial distribution, supported by a debt-free balance sheet, ongoing share buybacks, and a growing digital presence. The company is actively expanding beyond oil and gas, targeting midstream, renewables, and high-growth industrial sectors like water and mining. Additionally, OPEC's plans to increase oil production present a favorable tailwind, further supporting demand for DNOW's products and services. While commodity price swings and market cycles present challenges, it will be interesting to see how DNOW's commitment to diversification, operational efficiency, and new revenue opportunities plays out in the years ahead.