'Fast Money' Recap: Still on Board With Microsoft

Stockpickr Staff

Stocks in the U.S. closed the week on a mixed note Friday as investors digested a number of earnings reports, weak consumer-sentiment data and record oil prices. The Dow added 42 points, and the Nasdaq fell 5.99 points.

On CNBC's "Fast Money" TV show, the traders discussed Microsoft's(MSFT Quote) weaker-than-expected sales numbers. Guy Adami said the quarter was fine and said guidance for next year was fantastic. He still believes the stock is screaming buy at current levels. Karen Finerman said she is happy to own the stock at current prices. Jeff Macke disclosed that he bought shares in the software giant on Friday.

Finerman looked at a few options that Microsoft should consider as the merger deadline for Yahoo!(YHOO Quote) approaches. She said Microsoft could drop the bid, bump it, nominate new directors or exchange the offer for cash and stock. Her advice was to exchange the offer. Macke said that if he were running Microsoft he would tell Yahoo! to get bent. He disclosed that he sold that last of his Yahoo! shares on Friday.

Oil Boom

Crude oil prices spiked to almost $120 a barrel after news broke that a U.S. cargo ship fired at two Iranian speed boats. Addision Armstrong, a CNBC on-air contributor and director of market research at Tradition Energy, joined the traders to discuss his take on oil. He said that the interesting thing is that the Iran confrontation was 24-hour-old news, and it still moved the oil market. He said oil looks strong, and he isn't convinced that the dollar's strength is here to stay.

Najarian questioned Armstrong about the strength on natural gas. He responded that natural gas looks incredibly strong, and he said the futures contracts will trade up to $11.70. He added that large speculators are net short by the highest amount in history.

Najarian recommended that investors look at the oil service sector. He added that there is market speculation of a deepwater discovery near Brazil, and this could be bullish for names like Pride(PDE Quote), Transocean(RIG Quote) and Noble(NE Quote). He also likes the Oil Service ETF(OIH Quote) which broke out this week and trades at 11 times forward earnings.

Gold and Dollar Talk

Gold prices broke a two-day losing streak, and the dollar rose sharply. Adami said he doesn't like the price action in gold, especially after Dennis Gartman recently went bearish on the yellow metal. He predicted the dollar will reverse big time in the second half of this year. If that happens, he said, the entire commodities complex will get crushed. Macke said the dollar is done going down, and nothing was more evident of that than oil and the dollar both trading in tandem to the upside.

Chart of the Day

The traders took a look at the chart of hot agriculture name Potash(POT Quote). Najarian explained that charts don't go straight up forever. He said he doesn't think the ag names are done going up and said almost all of them have reasonable valuations. Adami recommended that investors pick up this week's issue of Vanity Fair for a great piece on Monsanto (MON Quote).

All Hail the Rail

Adami said to watch Burlington Northern(BNI Quote), which reports earnings before the bell on Tuesday. He advised investors to take some off the table around these levels. He mentioned that rail plays Wabtech(WAB Quote) and Trinity(TRN Quote) continue to rip higher. Najarian said the rails are doing well because of the ag and coal play.

He told investors to keep an eye on Joy Global(JOYG Quote) and Bucyrus International(BUCY Quote), which are the equipment makers that help get coal out of the ground.

Charging for Profits

Adami said the American Express(AXP Quote) numbers bode well for MasterCard(MA Quote). He also said to look at Wachovia(WB Quote) if you want to get back into financial stocks. Macke steered investors toward Goldman Sachs(GS Quote).

Fed Up With Rate Cuts

MKM Partners' Chief Economist Mike Darda joined the traders to discuss the upcoming Fed rate policy meeting set for Wednesday. Darda said he believes it will be "one and done" for the Fed. He explained that the rate-cut cycle is essentially over. He also mentioned he doesn't think the Fed will do an emergency surprise cut. Finerman explained that Fed member dissention could be signal that the central bank is done. Bottom line, the traders all say the Fed is going to be done.

Media Moves

Lehman Brothers media analyst Anthony DiClemente joined the traders to discuss his take on the media stocks ahead of their earnings reports set for next week. DiClemente said Viacom(VIA Quote) has earnings momentum, and he expects Discovery(DISCA Quote) to continue to outperform.

He explained that CBS(CBS Quote) has too much exposure to radio and TV stations, and those businesses have a lot of question marks. Disney is hitting on all cylinders, but the coming quarter will have tough comparisons, DiClemente said.

Playing Video Games

On Tuesday Take-Two(TTWO Quote) will be releasing the controversial video game Grand Theft Auto IV. Can investors make money off this? Macke said he doesn't believe that Electronic Arts(ERTS Quote) really wants to buy Take-Two. Take-Two has bet the house on this game, said Macke. He said he believes the numbers out of the gate for the Grand Theft are going to be enormous.

Quicker Than the Ticker

The traders looked at their recent good calls. Fineramn told investors to buy Philip Morris International(MO Quote). She was on the money, and MO went up 6% from her call. Adami recommended Apache(APA Quote). Shares of APA went up 12% since his call. Macke said buy Apple(AAPL Quote) on a dip before earnings. The stock ripped 11% higher from his call. Najairan picked Goldman Sachs(GS Quote). He nailed the call, and GS advanced 16%.

Trader Radar

Canon(CAJ Quote) shares were among the most actively traded on the New York Stock Exchange today.

Fast Fire

The traders took a look at some of their bad calls. Najarian had recommended AMR(AMR Quote), but record oil prices took the stock down. He said that if you're in this stock, get out. Finerman said to buy Microsoft going into earnings. The stock fell 6% since her call, but she is sticking with the name for a longer-term story.

Macke had advised investors to get into Starbucks(SBUX Quote). Since his call, the stock fell 13%. He said to stay out of the stock until Starbucks listens to him on how to fix the company. Adami had picked Ameriprise Financial(AMP Quote) because he said they have no subprime exposure. He was dead wrong, and the stock fell 11% from his call. He admitted he was wrong.

A Guest From the West

Neil Koehler the CEO of Pacific Ethanol(PEIX Quote) joined the traders to discuss ethanol. Koehler said that right now we're in an energy crisis, and we have a dangerous dependence on foreign oil. Ethanol is lower than the cost of gasoline and provides significant economic benefits, he said.

Najarian asked Koehler about liquefied coal. He said we need a whole host of new energy ideas to draw from like liquefied coal. Koehler explained that the government is mandating that we move away from fossil fuels and toward alternative energy sources that are renewable. He said that right now, ethanol is the best choice until a better technology or alternative energy choice comes along.

Final Trade

Macke said to sell Activision(ATVI Quote). Najarian's son picked Disney.

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