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NEW YORK (TheStreet) -- Companies have been repatriating earnings in order to boost revenue, as in the case of Lululemon (LULU) - Get Lululemon Athletica Inc Report, to increase available U.S. cash as in the case of eBay (EBAY) - Get eBay Inc. Report, or to smooth over the costs of restructuring as in the case of Staples (SPLS) -- but shareholders rarely see a benefit.

Repatriation is a necessary evil for all companies that sell goods or services outside the U.S. The word simply describes converting a foreign currency into the national currency. The amount received depends on the exchange rate at settlement time and, accordingly, there is an exchange risk there, but the risk to investors is even greater because it provides a way for multinational companies to play a shell game.

Roughly 362 companies in the Fortune 500 maintain tax haven subsidiaries, according to the Citizens for Tax Justice in its "Offshore Shell Games 2014" report published June 2014. "Only 55 Fortune 500 companies disclose what they would expect to pay in U.S. taxes if these profits were not officially booked offshore," says the CTJ. "All told, these 55 companies would collectively owe $147.5 billion in additional federal taxes."

Tax avoidance, or to put it nicely "minimization," is nothing new. In 2010, Bloomberg called out several drugmakers for finding ways to avoid paying taxes and both Apple (AAPL) - Get Apple Inc. Report and Starbucks (SBUX) - Get Starbucks Corporation Report are currently under investigation by the EU for their respective tax structures. Such government scrutiny is obviously necessary, and poses a risk to investors.

Repatriation can also be a way for a company to afford activities that make it look like it is doing well, even if it isn't. Take eBay for instance.

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The company took a $3 billion tax charge in order to repatriate $6 billion in foreign earnings and will use part of that money to execute its $5 billion share buyback program.

Does that mean eBay is a buy? Absolutely not. Taxes were a huge hit to net income for last quarter, its share price has fallen 14% over the past three months, and David Dorman, one of its own directors, doesn't own a single share in the company. Not very encouraging.

Repatriation can also be a way to cover up losses, as we can see looking at Lululemon.

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The company has never really recovered after its wardrobe malfunction. Its shares haven't been priced this low since 2011. Lululemon is trading at its lowest earnings multiple in five years. The company had to lower its guidance going forward but repatriation of earnings meant that it was able to beat its estimates -- the result may have been worse otherwise. 

And on top of all this the company is planning on a share buyback as well as expanding into men's wear and international markets? Lululemon is a sinking ship. It lost its CEO last year and it is about it lose its CFO at the end of the fiscal year.

Staples is in the same boat.

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The company may pay a 4.3% dividend and carry a price-to-earnings ratio of less than 12 but the company is down over 30% year to date, its net income is stagnant and its profit margins are shrinking. However, that fact was not apparent when Staples announced its earnings last month. The company still managed to meet expectations.

Repatriating earnings is, of course, a necessity of doing business internationally but investors should beware the timing of a transaction. If big news like a stock buyback comes with news of repatriation or the company repatriates earnings and still barely meets its estimates, do some due diligence and make sure the company is worth the risk.

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At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Renee Ann Butler holds no positions in any of the aforementioned companies. Butler takes this measure to avoid any appearance that her reporting or analysis is driven by personal interest.