This is shaping up to be one of the most tumultuous earnings seasons in quite some time.

#-ad_banner-#Stocks as diverse as Whole Foods (Nasdaq: WFM), AOL (NYSE: AOL) and Intuitive Surgical (Nasdaq: ISRG) are being hammered in the face of tepid quarterly results. The Nasdaq has been especially wobbly in recent weeks, posting sharp drops every few trading sessions.

It’s times like these that companies must prove their mettle, providing investors with solid reasons to hang on to their shares and avoid the temptation to lock in profits in what has been an extended bull market. And one of the best ways to show support for a flagging stock is through share buybacks. 

Many believe that buybacks pave the path to higher upside. Indeed, a portfolio of companies buying back shares, as reflected by the PowerShares Buyback Achievers ETF (NYSE: PKW), which has handily outperformed the S&P 500 in this bull market.

Yet you should also consider buyback stocks for their defensive characteristics. Buyback plans provide demand for shares at times when buyers are scarce. And if buyback programs are large enough, they can help boost earnings per share (EPS) by a solid margin, even when income growth is anemic. 

In this current earnings season, investors have been treated to a dozen stocks that are now in the midst of buyback programs that could shrink the share count more than 10%.

The fact that many of these stocks are trading for less than 15 times forward earnings (the current average multiple for S&P 500 stocks) is an added bonus. Discover Financial Services (NYSE: DFS), for example, trades at a solid discount to rival American Express (NYSE: AXP), as I noted a few weeks ago.

In the tech sector, Citrix Systems (Nasdaq: CTXS) emerged as a value play over the winter, and management’s subsequent $1.5 billion buyback announcement is a solid vote of confidence. 

China’s Twitter?
As the curious case of Herbalife (NYSE: HLF) shows, companies will sometimes use buybacks to combat negative publicity. And China’s Sina Corp. (Nasdaq: SINA) could sure use some good public relations: The Chinese Web portal operator has been in the crosshairs of Chinese censors due concerns about the promotion of pornography.

Perhaps an even better analogy to this company’s plight is Twitter (NYSE: TWTR). Both companies were only recently highly prized for their impressive Web-based growth prospects, but both have seen their shares stumble badly. 

Yet unlike Twitter, which continues to be impacted by a recent share price lockup expiration, Sina is creating demand for its shares by announcing plans to buy back up to $500 million in stock. Investors will get more details about Sina’s operations when first-quarter results are released on May 21, which gives investors ample time to brush up on the issues and see if this buyback comes at the perfect time. After all, it’s not often that companies get to buy back shares after they have lost half of their value in just six months.

Below Book Buyback
Value investors, of which there are many in the current market environment, should check out insurers that are buying back stock, as many of them trade near or below book value. I’m a big fan of Assured Guaranty (NYSE: AGO), which is in the midst of an ongoing buyback program, but investors should also take note of the buyback program underway at Platinum Underwriters Holdings (NYSE: PTP). This profitable insurer has seen book value rise from $48 a share in 2011 to a recent $65, and book value is on track to surpass $70 some time in 2015. Meanwhile, shares trade in the low $60s.

Risks to Consider: Buyback programs can cushion the blow in a falling stock market, but they can’t ensure a floor for a stock, so these firms may end up, in hindsight, be buying back shares at the peak of the bull market. 

Action to Take –> In most of the instances in the table above, these buyback plans have not been filtered into 2015 EPS forecasts. As a result, the actual EPS could end up higher than current forecasts, and as a result, the projected price-to-earnings (P/E) ratio even lower. And finding stocks with positive EPS factors is a key virtue in this increasingly unstable market environment.

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