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NEW YORK (
) -- Melissa Lee started "Fast Money" off asking if the markets were headed to new highs in 2010, and that got a spirited response from the "Fast Money" crowd.
Tim Seymour admonished investors to not "follow the crowd." The message from Seymour: You have to trade the market in front of you each day. So who cares if the market is up 8%-10% a year. Don't play the macro trends, especially in 2010, because the unprecedented volatility in the markets is going away. What hasn't worked for the trader in the past 18 months will work for the trader now.
For a breakout of some stocks from a recent "Fast Money" TV show,check out Dan Fitzpatrick's "3 Stocks I Saw on TV."
3 Stocks I Saw onTV
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Karen Finerman said it has been all about the macro trades in the recent past, but now she finally thinks the situation is really changing, and the VIX (using the volatility index as an indicator) shows that this time the rhetoric that instructs one to trade day to day, as opposed to trading the big picture, is right.
Peter Naraian agreed, saying unless there is another major meltdown in the markets, the volatility we have seen won't be seen again and the way to play the markets is to use volatility to buy protection on good companies, and make your sector picks.
Stock picking with protection is the new mantra for 2010, Michelle Lee said, summing up the big trading theme headed into 2010.
The "Fast Money" gang was heading into the holidays making their high risk and low risk stocks of 2010 selections.
2010 Stock Picks
Guy Adami picked
as his low-risk stock of 2010. He said that H-P is more or less competing with itself, as opposed to facing threats from any one peer, and it has huge recurring revenues, its valuation continues to go up steadily -- every day HP seems to hit another 52 week high. All of these factors make H-P a no-brainer as a low-risk pick for 2010.
Tim Seymour agreed, noting that H-P is still relatively cheap and its printing business, which has been down this year, will drive 65% of its international growth.
On the high-risk side, Guy Adami likes
Research in Motion
( RIM). Forget about those outtages today in the Blackberry world. The high-risk trade is to get out of long positions now, or go short RIM. While the margins were good for this quarter, Adami says RIM will be pressured in 2010, making it worth a look on the short side.
Peter Najarian presented a bull story for RIM, however. He said when you look at the forward price-to-earnings numbers, RIM has a compelling story, and while there is competition, now that the stock has pulled back a little, it could be time to play RIM. It was a $58 stock trading over $70 recently, and now that RIM has pulled back, it could be getting close to an entry point, Najarian said. However, he added that he has not jumped back in himself yet.
Najarian also said the RIM business is becoming more of a consumer commodity business, like the iphone, and that could be a big growth area. Tim Seymour noted that you can buy the RIM products in
now, and it is clearly no longer just a business product.
Adami countered by saying that RIM's growth has come in the emerging markets and if that is the growth engine, investors need to be cautious there.
Karen Finerman did not go too far out on a limb with her low-risk trade for 2010, targeting Wal-Mart. The pick was no shocker to anyone, and Finerman conceded that 50% profits are highly unlikely, but the critical point is that Wal-Mart will do well whether the market is up or down, and even when the market is up in a huge way, Wal-Mart will trail as a risk-reward play; it will still deliver. Finerman maintains a big position in Wal-Mart.
The "Fast Money" gang leader Melissa Lee focused the Wal-Mart discussion on Wal-Mart's continued price dropping, asking, at what point does it not work anymore for Wal-Mart, already operating at razor-thin profit margins?
Tim Seymour helped Finerman's cause by looking to the international growth story, arguing that Wal-Mart has plenty of room outside the U.S. to grow its business. He noted that in Brazil and Russia, investors should look for Wal-Mart to go on a buying spree itself, markets where in the past there have not been stores big enough for Wal-Mart to target.
On the high-risk side of trading, Finerman selected
a liquefied natural gas carrier. Golar is really an international play, Finerman noted, with business from Asia to Brazil. She explained that Golar's business is really two pieces: It is locked into long-term contracts that will begin paying dividends next year, and it has a spot tanker business, which can make a big move on any change in the day rates in gas prices.
Finerman sees the supply situation favoring Golar, with more liquefied natural gas being produced and looking to be transported. This dynamic moves day rates and that could give a big boost to Golar. Golar is a good way for investors to gain exposure to the natural gas market: Go long Golar, was the message.
Tim and Pete's Top 2010 Picks
Tim Seymour is going with agriculture for low-volatility 2010 stock picks. In agriculture, Seymour likes
Even though big global shocks can make agricultural plays seem like high-risk stocks, Seymour said fertilizer has already priced down to where froth is gone from the stocks, and as far as he is concerned, these prices are at the bottom of the cycle. Most importantly, buying these stocks is a play on M&A expectation that they will be taken out, and the action in the fertilizer wars recently has been feverish.
Peter Najarian likes
Johnson & Johnson
at the low-end of the risk spectrum. And what's not to like? It's a disciplined stock that has stuck with its strategy of growth through acquisition, but only at under $5 billion.
On the more speculative side of the drug outlook, Najarian told investors to keep their eyes on
, which has an Alzheimer's drug that could be a huge blockbuster if it pans out. The way to play it is through options. With news due out sometime in the first quarter or second quarter, Najarian told investors to go out to June on the options. While that won't be a cheap trade, the risk-reward is still huge, with potential for a $10 billion-$20 billion drug.
On Wednesday, crude oil inventory was down and that sent crude oil up by 3%. Tim Seymour said the drop in crude inventory was bigger than expected and really caught people off guard. It looks like the oil rally will continue, whether it is a true oil rally or the dollar weakness triggered by the poor U.S. housing market that continues to wag the dollar tail.
Peter Najarian noted that oil has been breaking out for some time, and there are a few companies worth looking at based on the oil rally. One to investigate is
. Najarian cautioned that the company is controversial, and accused by some market watchers of being a scam, but it is not only himself, but also Morgan Stanley who believes InterOil is an interesting play. It is a huge momentum stock that will continue to go higher, in Najarian's opinion.
The energy trade has been making big bucks for financial bigwigs for some time already, the "Fast Money" gang noted. Goldman Sachs has been recommending to clients going long energy and short financials, and that trade still looks good going into 2010. Any investor can see how those trades have been working out by taking a look at the charts of two exchange-traded funds:
The chat about the Goldman Sachs energy trade led to a discussion about the outlook for financials. Finerman noted that she is bullish on banks, including
Bank of America
Seymour said to keep trading with Goldman on this one, because while the market share gains made by Bank of America and
will eventually benefit investors, the whole financial sector will continue to be challenged in the short-term in a way that energy is not. And the
( XTO) tells you there is lots of M&A activity coming in the energy sector, too.
Guy Adami said while the Goldman trade may continue to work, one thing is clear and should be clear to investors by now: the easy short money is over in financials.
Peter Najarian also chimed in on the health of the banks, saying the only ones that might be good short-term plays are the investment banks like
. The big banks are just too diluted to rebound quickly, and that recovery story will be well beyond the first two quarters of next year.
"Fast Money" invited Brian Nagel, analyst at Oppenheimer, to discuss which company will win the retail battle.
Finerman noted that the announcement that Wal-Mart will keep discounts going through the new year is not a troubling one, as Wal-Mart has done it countless times before with groceries and toys. Now, Wal-Mart is extending the discounts, but the fact remains that no one can move volumes like Wal-Mart can, Finerman said.
Nagel doesn't cover Wal-Mart, but did note that Wal-Mart certainly has been a big factor this season in consumer electronics, and that has put a lot of pressure on one of the companies he does cover,
. Best Buy's recent earnings clearly reflected the gains made by Wal-Mart in consumer electronics, Nagel said, and with the prices going down on key profit makers like TVs, it is more difficult for Best Buy to achieve sales growth.
Can Best Buy continue to compete with Wal-Mart on its turf? Nagel was non-committal, but said we will see more pressure on Best Buy. The demise of Circuit City caused a feeding frenzy, but a frenzy among a product that is commoditizing quickly, and that will continue to be a problem.
President Obama appointed the first-ever cyber czar yesterday, and as the Internet is the new battlefield for 2010, "Fast Money" invited Alex Hamilton, analyst from Jesup & Lamont, to talk about stock plays based on the threat of cyber warfare.
Hamilton said the best thing about these stocks is that the risks are not priced in, and with Twitter and
both breached by hackers this week, it's a stock picker's sector that has underperformed this year. The biggest beneficiaries of increased cyber protection are the pure-play firms, like
. Mantech is going to gain from security spending, and can grow organically 10%-15%.
-- Written by Eric Rosenbaum in New York
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