When a stock performs strongly, it often means that the fundamentals of a company’s business are moving in the right direction. Unwarranted hype or speculative trading can drive rallies as well, but these tend to be exceptions rather than the rule. One way to tell that strong fundamentals drive a stock’s gain is by what management does with its cash.
When management feels confident in its business and that fundamentals influence appreciation, share buybacks are a key avenue they often turn to.
