"Sears Holdings (SHLD) announced today that its Board of Directors has approved the repurchase of up to an additional $500 million of the company's common shares. This authorization is in addition to the $30 million worth of shares that remain available for repurchase under the $1 billion share repurchase program previously announced. Since initiating that program in Sept. 2005, Sears Holdings has purchased approximately 8.0 million of the company's common shares at an average cost per share of $120.86."

That is the first paragraph of a Sears Holdings press release issued Wednesday morning. One of the most attractive aspects of owning Sears stock is the fact that as of December 31st they had $4.44 billion in cash on the balance sheet, which equates to $28 per share, or more than 20% of the company's equity value. Share repurchases are one of the main tools Eddie Lampert and Co. will use to convert store cash flow into higher earnings per share, which will subsequently create quite a lot of shareholder value.

Unlike Cisco (CSCO) and Intel (INTC), they aren't buying back stock when it is overvalued just to cover up options dilution. Rather they are buying it because it is undervalued and they have a pretty good idea that their average cost per share will be below market prices several months later.