This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

'Fast Money' Recap: To Buy or Avoid Momentum Stocks?

NEW YORK (TheStreet) -- The S&P 500 and Dow Jones Industrial Average both closed at all-time highs. 

Guy Adami, managing director of stockmonster.com, said many momentum stocks have formed a short-term bottom. He added that Twitter (TWTR), LinkedIn (LNKD) and Netflix (NFLX) all look poised to continue higher this week. 

Brian Kelly, founder of Brian Kelly Capital, said he is not tempted to buy momentum stocks, which he called "broken." He added that the economy is not strong enough to justify the valuation of these high-flying stocks. 

Steve Grasso, director of institutional sales at Stuart Frankel, who is long Twitter (TWTR) and Amazon (AMZN), said investors should buy momentum stocks now. He is not a buyer of the overall market, though.

Karen Finerman, president of Metropolitan Capital Advisors, reasoned that just because momentum stocks have gotten cheaper over the past month, doesn't make the stocks cheap in valuation. 

CNBC's David Faber was a guest on the show. He said International Business Machine (IBM) had a rough first quarter of earnings as sales continued to underwhelm investors. However, the company is making a move out of its slower growth businesses and into higher growth, higher margin businesses, he added. However, a turnaround is hard to pull off for a company the size of IBM, he acknowledged. 

Grasso said the stock seems poised to go lower. He reasoned that the stock is only higher because investors have been rotating out of high-growth stocks and into blue-chip stocks. 

Adami agreed, saying he feels comfortable being short IBM. He added that if the market takes a turn for the worse, IBM will underperform. 

Kelly pointed out that IBM using almost all of its cash-flow to repurchase shares. With cash flows shrinking, the share buyback will slow and therefore the stock will be less valuable as earnings per share growth slows, he reasoned. 

Adami said Rackspace Hosting (RAX) can climb to the mid- to upper-$30s. He suggested investors wait a few more days before considering short-selling the stock. 

Kelly said investors who are long shares of Twitter should take profits after the recent bounce. 

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,138.78 +107.64 0.63%
S&P 500 2,000.77 +16.64 0.84%
NASDAQ 4,556.2010 +37.2990 0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs