Why Cramer Loves Buybacks
In a falling market, there's always one thing investors can count on, Cramer told viewers -- companies with big stock buyback programs. That's why he's a fan of contract manufacturer Flextronics (FLEX - Get Report) and seed giant Monsanto (MON - Get Report), two companies with mammoth buybacks.
Cramer explained that outsourcing your manufacturing is still a growing trend around the world and Flextronics is one of the leaders in the space. The company has a diverse customer base across multiple industries and is benefitting big from the LTE wireless buildout in China. But more important, Flextronics is a cash cow with a buyback authorization to purchase 20% of its market cap. With the stock trading at just nine times earnings with a 13% growth rate, Cramer said the stock could be 20% higher if that multiple expands to just 11 times earnings.
Then there's Monsanto, which may be declining along with falling commodity prices for corn and wheat, but the company also has a $10 billion buyback in place. Monsanto dominates the U.S. seed market and has long-term tailwinds that will propel it for years to come. The company is also a potential breakup story, which would translate into a 17% rise in the stock if it were to actually occur, said Cramer. With shares already down from $128 to $115, Cramer said Monsanto is increasingly attractive.