'Fast Money' Recap: New Bond Insurer

Stockpickr Staff

Light trading ruled the day in the stock market Friday. The Dow finished up 6 points and the Nasdaq closed down 2 points. The crew at CNBC's "Fast Money" reviewed the day's trading, looked back over the year and looked ahead to 2008.

Guy Adami was surprised that the bears didn't knock the market down 200 points with the light volume. He was encouraged that the market was able to hold off any material selling pressure. Pete Najarian liked the action in the Nasdaq stocks especially the strength in the four horsemen. Jeff Macke explained that all we saw on Friday was some jockeying by money managers before the end of the year.

Headline of the Day

Warren Buffett's Berkshire Hathaway(BRK.A) announced plans to start a municipal bond insurer. Finerman declares that this is bad news for MBIA(MBI) and Ambac(ABK). Macke feels this move is genius for Buffett and he will kill the competition. Najarian advises waiting for any lift in MBIA and then putting on an option put spread because the stock is in trouble.

(Take a look at the rest of Buffett's portfolio on Stockpickr.com Warren Buffett.)

Word on the Street

Gold traded up 3.3% and the dollar dropped to the lowest level against the Euro since 2006. Adami thinks the dollar will rally in 2008 and he continues to be bearish on gold at the levels. Najarian favors the commodities stocks especially the names tied to coal like Peabody(BTU) and Joy Global(JOYG).

Retail stocks fell this week off of disappointing Christmas sales. Macke explained it's too late to short the retail stocks, but that doesn't make them good buys. He mentioned a trade that might be worth buying is Retail HOLDRS Trust(RTH), which tends to trend up in January.

Finish Line(FINL) plunges 24% after a judge rules it must complete the $1.5 billion deal for Genesco(GCO). Finerman explained that Finish Line is now forced to do a deal that will bankrupt them. She says if you want to play this dicey mess use options only. Macke called the deal a "stink show".

Cal-Maine(CALM) explodes higher after second-quarter profits jumped sixfold. The stock is up 218% for the year. Najarian explained the amazing part of this company is that they ship eggs all over the world.

Top Stocks Of 2007

The biggest winners for the S&P 500 in 2007 were Jacobs Engineering(JEC) up 144%, National-Oilwell Varco(NOV) up 141%, Amazon.com(AMZN) up 139%, Apple(AAPL) up 134% and MEMC Electronic(WFR) up 131%. Adami explained that the valuation on Jacobs Engineering is getting rich, but he would look to buy on any pullback. He feels the infrastructure story is the real deal.

Najarian loves Amazon and Apple and he sees no reason for either of these stocks to pullback. Macke thinks the bears are dead wrong on Amazon and he wouldn't short the stock. Finerman mentioned that she is worried that Apple is priced for perfection. Najarian likes MEMC Electronics for a way to play the solar sector. Adami also likes National-Oilwell Varco on any pullbacks.

Worst Stocks Of 2007

The worst performing stocks for the S&P 500 in 2007 were E*TRADE(ETFC) down 83%, Countrywide(CFC) down 79%, Circuit City(CC) down 77%, Washington Mutual(WM) down 70% and MBIA(MBI) down 70%. Adami says take a look at E*TRADE for a possible takeover play, but if it doesn't happen it's a dead stock this year. Macke thinks Circuit City is going to zero and will be booted from the S&P 500 in 2008.

Analyst Contrarian Trade for 2008

A study recently showed that if you buy the stocks that analysts say will be the worst performing Dow components for 2008 you can make money. The stocks that analysts are bearish on for 2008 are General Motors(GM), Pfizer(PFE), Caterpillar(CAT), Dupont(DD) and Citigroup(C). Adami loves Pfizer and he thinks the stock will trade to $35. Macke likes Caterpillar and he thinks it's bizarre that the analysts hate it.

(Here's another way to be a contrarian on Stockpickr.com Janus Contrarian.)

Tech Comeback Kids

Microsoft(MSFT), Intel(INTC) and Oracle(ORCL) all put in a strong performances in 2007. Are these stocks worth betting on for 2008? Macke thinks these companies are the technology survivors and are all buys. He warned investors not to bet against this group. Adami continues to favor Microsoft and he thinks that $32 will be strong support for the stock.

Japan's benchmark index fell 11% in 2007 for its first loss in 5 years. Adami mentioned that Japan's ETF iShares MSCI Japan Index Fund(EWJ) trades in a range from $13 to $15. He feels the EWJ is dead money for 2008. Najarian prefers China to Japan and he likes playing it with China Mobile(CHL), Apple(AAPL), Research In Motion(RIMM), Cisco Systems(CSCO) and Juniper Networks(JNPR).

Quicker Than the Ticker

The crew likes to revisit their trade ideas to see how well they fared. These ideas made the traders look pretty good.

On Dec. 17th Najarian said buy Amazon.com(AMZN). He was dead right and the stock traded up 12% since his recommendation. On Dec. 3rd Macke recommended Take-Two Interactive Software(TTWO). Take-Two has risen 15% since Macke's call. On Dec 18th Adami picked Joy Global(JOYG). Adami was on the money and JOYG went up 19% since his call. It was Nov 26th when Finerman recommended shorting Big Lot(BIG). Finerman nailed the call and Big Lot fell 21% since her call.

Fast Fire

Then again, some trade ideas don't work out as planned.

On December 6th, Najarian recommended buying Target(TGT), but he was off the mark and Target fell 8% since his call. Najarian still likes the valuation on Target and he suggested investors stay with the stock. On December 5th, Finerman advised investors to avoid Solarfun(SOLF). She was dead wrong and the stock soared trading up 44% since her call. Finerman still thinks the stock is overvalued and she isn't changing her tune.

Pops & Drops

The following POPS&DROPS highlights the stocks that made extreme moves for the week.

Pops - CDC Corporation(CHINA) traded up 23% after insiders bought almost 500,000 shares. Najarian likes that insiders were buying stock.

United States Steel(X) traded up 2%. Adami likes X.

Global Payments(GPN) traded up 5%. Najarian predicts GPN will report a good number next Thursday.

Amazon.com(AMZN) traded up 4%. Macke doesn't understand why people are shorting this AMZN.

DSW(DSW) traded up 9% after Jay Schottenstein, Chairman of American Eagle, reported he holds a 14% stake in DSW. Finerman disclosed she owns DSW.

NetSuite(N) traded up 8%. Najarian disclosed he sold out of his position Friday, but would look for a pullback to get back in.

Drops - KB Home(KBH) fell 9%. Adami tells viewers that KB Home is a lousy company.

Mattel(MAT) fell 7%. Macke advises investors to sell Mattel.

Simon Property Group(SPG) dropped almost 2%. Finerman disclosed she is short SPG and she still sees more room to the downside.

Final Trade

The team shared the trade ideas that they think will be the most profitable.

• Adami picked Deere & Co(DE).
• Finerman recommends shorting Big Lots(BIG).
• Najarian likes Caterpillar(CAT).

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