Cramer's 'Mad Money' Recap: The Buyback Defense

The Unknown Sears

Herb Greenberg, CNBC contributor and senior Marketwatch columnist, came on the show to challenge Cramer on his love affair with Sears.

"The earnings quality is unknown," Greenberg said, noting that the company's 10-Q filing was not released with its earnings. Even if you look at the metrics and the debt-buybacks, the company's earnings potential is still unknown, he added.

But Cramer disagreed, saying that cash is going up and that the company is buying back stock. Moreover, he said that Wall Street was shocked by the margin expansion at Sears.

He brushed aside Greenberg's concerns that it is unclear whether Sears is a retailer, a balance-sheet company or an asset play, saying that as long as the stock goes higher, there's no need to worry.

But Greenberg said he remained worried about the company's earnings potential, which is still an unknown, adding that the stock price will slide if cracks emerge in the earnings story.

Both men agreed that it's best to stay away from United Online(UNTD Quote - Cramer on UNTD - Stock Picks), a dial-up Internet company that has a 6% yield.

People are in the stock for the yield, Greenberg said, adding that the company has refused to "swallow the bitter pill" and admit that its core business has issues.

EarthLink(ELNK Quote - Cramer on ELNK - Stock Picks), on the other hand, said that there were problems with dial-up. It saw its stock go down, but then got on with the business of making improvements.

One company did the right thing and the other didn't, he added.

On the Defensive

Defense companies DynCorp(DCP Quote - Cramer on DCP - Stock Picks) and CACI International(CAI Quote - Cramer on CAI - Stock Picks) have received a lot of press, and while they may be in the same business, Cramer said that one could shoot down investors.

He said that DynCorp isn't a bad company just because its employees have been accused of human rights violations, but also because it has a bad balance sheet and its customers have reportedly accused it of doing shoddy work.

On the other hand, there is chatter that CACI might be bought by BAE Systems, and that it has solid financials.

Moreover, he said that Donald Rumsfeld likes CACI, and that if he wins the battle with his detractors, it will be good for the company.

Lightning Round

Cramer was bullish on Baidu.com(BIDU Quote - Cramer on BIDU - Stock Picks), Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks), Con Edison(ED Quote - Cramer on ED - Stock Picks), VeriFone Holdings(PAY Quote - Cramer on PAY - Stock Picks), Immucor(BLUD Quote - Cramer on BLUD - Stock Picks), Freeport-McMoRan Copper & Gold(FCX Quote - Cramer on FCX - Stock Picks), Kinder Morgan(KMI Quote - Cramer on KMI - Stock Picks), BE Aerospace(BEAV Quote - Cramer on BEAV - Stock Picks), Brocade(BRCD Quote - Cramer on BRCD - Stock Picks), Finisar(FNSR Quote - Cramer on FNSR - Stock Picks), JDSU(JDSU Quote - Cramer on JDSU - Stock Picks) and Crystallex International(KRY Quote - Cramer on KRY - Stock Picks).

Cramer was bearish on Alliant Energy(LNT Quote - Cramer on LNT - Stock Picks), Dynamic Materials(BOOM Quote - Cramer on BOOM - Stock Picks), Suntech Power Holdings(STP Quote - Cramer on STP - Stock Picks), Sirius Satellite Radio(SIRI Quote - Cramer on SIRI - Stock Picks), MDU Resources(MDU Quote - Cramer on MDU - Stock Picks), Elan(ELN Quote - Cramer on ELN - Stock Picks) and Allegheny Technologies(ATI Quote - Cramer on ATI - Stock Picks).

For more of Cramer's insights during the most recent Lightning Round, click here.

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