It’s one of the year’s hottest investment trends, seemingly enticing, but looks, as we all know, can often be deceiving. Take the rash of corporate stock buybacks, more than $130 billion so far this year and up a blistering 75% from $74 billion a year ago. What’s more, given Corporate America’s cash rich balance sheets, the buyback craze shows no signs of letting up.

On the surface, that sounds great. Buybacks, as we all know, are quite positive since the fewer the shares, the higher the per-share earnings, and the greater the stock leverage on any favorable tidings. So it’s no wonder investors often rush to buy a stock on a buyback announcement.

If you’re one of them, beware: You may be chasing fool’s gold. Why so? “Because it’s easy to be duped,” I’m told by Richard Moroney, research chief of the Dow Theory Forecasts, a well-regarded weekly investment newsletter out of Hammond, Ind. “Share buybacks look like they deliver the steak and sizzle,” he said, “but sometimes less really is more.”

In other words, although companies are supposed to wind up with less shares, not more, after announcing a stock buyback, just the opposite is frequently the case, due to such factors as employee stock option plans, options becoming vested, and the issuance of restricted shares. Likewise, many companies, after such an announcement, often take an incredibly long time to effect the actual buyback, while others never seem to follow through and actually buy in the stock in the announced size.

The numbers tell the story. A recent study by Dow Theory Forecasts finds components of the S&P 500 index have purchased more than $700 billion of their own shares over the last five years. But during that very same period, their share count actually increased by an average 15.4%. Much of it reflects the failure of many companies to buy back enough shares to fully offset options exercised and new stock issued to fund acquisitions.

Take Dell, whose current 2.5 billion share count is slightly higher than it was in 1993, even though Dell bought back $18.3 billion worth of stock during that period.

Still, a study by the newsletter shows those companies that consistently repurchase stock sufficient to reduce their share count actually outperform by an appreciable margin those that don’t.

Interestingly, though, a study by Morgan Stanley shows buybacks, at least initially, are only modestly positive. For example, a buyback announcement, on average, results in gains of 0.3% the first day, 0.7% in a month, 1% in three months, and 2.3% in a year.

In this context, Mr. Moroney favors a number of companies that have made sizable stock buybacks over the past one, three, and five years, among them American Express and Anheuser-Busch. Each is rated a solid buy by the newsletter, which sees each generating at least a 10% to 20% stock gain over the next 12 months. Here are some of Mr. Moronery’s brief thoughts on each, plus the percentage of their shares they’ve repurchased over the past five years in parentheses:

* American Express (7.2%): The company has reduced its share count in nine of the last 10 years and repurchased more than 507 million shares since September 1994. Repurchases slowed in the March quarter in advance of a $1 billion capital infusion planned for the spin-off of the financial advisory unit later this year. But the balance sheet is strong, and free cash flow topped $57.7 billion in the last 12 months. Given Amex’s history of buybacks, it’s likely to increase its repurchases after the spin-off.

* Anheuser-Busch (14.8%): A hot summer can be the best beer salesman, and that’s good news for the company. While beer volume growth in the first quarter was low, aggressive discounting and high temperatures sparked an increase in May. According to the National Weather Service, higher than average summer temperatures are expected throughout the South and West this summer. When beer prices fall, brewers’ margins tend to shrink, limiting profit growth. But Anheuser-Busch, which has been gaining market share, in part because of price cuts, still projects price increases of 1% to 1.5% this year, lower than normal, but increases nonetheless. It also expects better pricing in 2006.

A word of caution: Granted, a stock reducing buyback is good news. But if that tempts you to buy, make sure the buyback is a real one, not just talk, so you don’t end up being a stuckholder instead of a stockholder.