'Fast Money' Recap: All Right, Apple
After earnings reports swarmed the market, U.S. stocks closed in positive territory Wednesday. The Dow and the S&P 500 both finished up around 0.3%, while the Nasdaq gained 1.2%.
On
CNBC's
"Fast Money" TV show, the traders discussed an earnings beat from
Apple
(AAPL) - Get Report
. Pete Najarian said the report was incredible. Going forward, the company sandbagged, he said, and the market didn't like that, selling the stock when the company issued guidance.
Karen Finerman said she'd like to see what happens as the conference call concludes, because she has noticed that the stock often recovers during the call.
Jeff Macke said Apple manages its stock better than any company out there. He observed that the stock has ripped 40 points in the last six weeks. It's important for the company to sandbag on numbers to keep expectations in line, he said.
3 Stocks I Saw on TV |
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Guy Adami said Apple's gross margin numbers scared investors. However, he said that the stock is still in an uptrend, and he recommended buying Apple at $155. Najarian agreed, saying Apple looks "tasty" on a valuation basis.
Coffee Break
Starbucks
(SBUX) - Get Report
cut its second-quarter and full-year 2008 forecast, citing a slowdown in consumer spending. Jeff Macke expressed disappointment that the company has difficulty selling coffee, which he said is an addictive substance. He said he had told Starbucks how to fix its business, and the company issued the "namby-pambiest" warning. He said he's done with the stock, and he's a seller.
Finerman asked Macke if he had a price at which he would buy Starbucks. Macke said he didn't, because he wants to hear about a business plan. Najarian said that
Burger King
(BKC)
,
Dunkin Donuts
and
McDonald's
(MCD) - Get Report
are better opportunities.
Down the Amazon
Amazon.com
(AMZN) - Get Report
shares traded down after hours despite improved earnings for the quarter.
Adami said he believes Amazon's valuation is catching up to the stock. He said he has never liked Amazon and has been wrong about the stock for a long time, but now the company may have trouble growing fast enough to justify its P/E.
Macke pointed out that Amazon rallied when
(GOOG) - Get Report
beat on earnings. He said the company is really just a very effective retailer.
Najarian said that, as with
eBay
(EBAY) - Get Report
, when stocks like Amazon rally ahead of earnings, it's an opportunity to sell.
The traders talked to TD Ameritrade Senior Vice President Jay Pestrichelli about after-hours action. He noted that Amazon was not experiencing a lot of option volume, but the trading was skewed to the put side.
Further Action
Ambac
( ABK) shares plunged 43% today. Finerman said that the company registerd a very big loss. She said she was disappointed that the Street has gotten complacent about stocks in the financial services space that have exposure to the same things Ambac does.
Adami said Ambac traded on huge volume today. He doesn't like the business, but he predicted a relief rally in the stock, perhaps up to $5.
Najarian brought up bullish activity in
Boeing
(BA) - Get Report
on its earnings report. He recommended looking at
BE Aerospace
(BEAV)
as another play on airplanes.
Adami said that the upgrade cycle in airplanes is real. He said Boeing looks cheap on a valuation and predicted that when the Dreamliner comes out, the stock could hit $100.
Finerman pointed out a solid earnings report from
Philip Morris International
(PM) - Get Report
. She praised the management team for effectively controlling Street expectations, and said the company's story is intact.
Anheuser Busch
(BUD) - Get Report
reported lower revenue and higher costs, the latter of which stemmed from high grain prices. Macke said that the stock could have moved down much further, and said it was a bullish signal that it didn't sell off very hard. He said
Molson Coors
(TAP) - Get Report
is a better play, but investors could build a position in Anheuser at these levels. Adami agreed, saying the stock has a fair valuation.
Mining company
Freeport-McMoRan
(FCX) - Get Report
reported earnings today. Adami noted that Lehman Brothers forecast that copper prices would double from 2008 to 2009. He agreed, and said that Freeport's molybdenum business is important for steel. He predicted a selloff of Freeport shares of a decline in gold prices, but he says the stock is a buy.
Finerman said she wonders when the stocks are priced for perfection and said the mining companies will have to deliver incredible earnings to sustain investor enthusiasm. Adami said that on a valuation basis, Freeport trades at 10 times forward earnings, and
Newmont Mining
(NEM) - Get Report
has traded at a much higher multiple. He said he believes Freeport has lagged for the wrong reasons.
Waiting for Mister Softee
Microsoft
(MSFT) - Get Report
reports earnings tomorrow. The market is expecting a strong quarter.
Adami said the stock has had a big move in the past month but predicted the company would "crush" on earnings. He said he believes Microsoft should trade at $35. Najarian said that increased Mac sales probably weren't that much of a problem for Microsoft. He recommended selling the stock if it reaches the mid-30s. He recommended waiting for pullbacks from that price.
Macke said that if the stock goes down tomorrow, it will have had a 20% gain lately anyway. He said the company is smart, good, aggressive and well capitalized. Finerman predicted that Microsoft will lower its bid for the Internet company
Yahoo!
(YHOO)
. Macke said he didn't see Microsoft raising its bid to $35, and said Yahoo! shares would trade down to $19 if Microsoft retracted its bid.
Crude Talk
The traders welcomed
CNBC
contributor Dennis Gartman to the program to discuss crude oil. Gartman said that oil has had a long run to the upside and noted that wheat had broken down and gold is in the process of losing ground. He said that the next move for oil may be down $10. Najarian asked about the
Oil Services HOLDRs
(OIH) - Get Report
. Gartman said that even if crude backs down, he said that the oil service sector will likely remain a good space to play. He said he's a long-term bull on oil, but the stock could retrace back down to $100.
Adami asked Gartman what happened to gold. Gartman said the commodity failed to make new highs even as the dollar made new lows. He said he wouldn't be surprised if gold went down another $40. Najarian said that natural gas appears to continue to perform despite the selloff in other commodities.
Dining Out
The traders noted a rally in some casual dining names such as Chuck E. Cheese's operator
CEC Entertainment
(CEC)
and
P.F. Chang's
( PFCB). They also observed that
Yum! Brands
(YUM) - Get Report
served up an upside surprise today.
Macke said that
Brinker
(EAT) - Get Report
also beat today. He said restaurants appear to be putting in a bottom here. He said investors can buy
Darden Restaurants
(DRI) - Get Report
,
California Pizza Kitchen
( CPKI) and Brinker as anxiety leaves the casual dining space.
Trader Radar
Reseach In Motion
( RIMM) traded on unusually hefty volume today.
The traders looked at American companies that are taking advantage of growth in China. With a huge potential customer base, the country offers companies with fading brands a chance for new growth. They observed that
Procter and Gamble
(PG) - Get Report
and Yum! are performing very well in China.
The traders talked to Zach Karabell, president of River Twice Research, about the trend. He said that Yum! Brands has a history of building into China over the past several decades. He said Starbucks might be the next company to break into that market. He also noted that Boeing has announced huge orders from China.
Commander Planet
Najarian once again appeared as Commander Planet to offer trades on environmentally friendly trends. Today he focused on retail, saying
Wal-Mart
(WMT) - Get Report
has started powering its stores with solar panels. He also said
JC Penney
(JCP) - Get Report
has a line of clothing that is all green, and
Interface
( IFSIA) offers carpet that's made of recycled plastics.
Najarian's favorite play, however, is
Apogee
(APOG) - Get Report
, which makes glass that lets light in while deflecting some of the sun's energy. This technology will help companies save energy, he said.
Final Trade
The traders unanimously selected Microsoft.