'Fast Money' Recap: Sorting Out Alcoa - TheStreet

'Fast Money' Recap: Sorting Out Alcoa

The trading panel analyzed the company's earning miss and what it means for the other commodities.
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NEW YORK (

TheStreet

) --

Alcoa

(AA) - Get Report

shook the market in after-hours on Monday after the largest aluminum producer in the U.S. reported an earnings miss.

In the regular trading session, the

Dow Jones Industrial Average

rose 45.80, or 0.43%, to 10,663.99, while the

S&P 500

added 2, or 0.17%, to 1,146.98. The

Nasdaq

slumped 4.76, or 0.21%, to 2,312.41.

Pete Najarian said on

CNBC

's "Fast Money" TV show that Alcoa's been a serial disappointer, although there were some good things in the report to like such as its free cash flow of nearly $750 million and nearly $1 billion in cash on the sheets. "I'm not a big fan of Alcoa. It's had its run," he said. "There are far better metals to be in."

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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Melissa Lee, the moderator of the show, said Citi should be credited for seeing this miss early on when it advised a hold on the stock.

Tim Seymour said the question for Alcoa, which is as lean as it can be operationally, will be demand for its product. Joe Terranova said it will also be necessary to factor in the cost for Alcoa to restart some facilities it had shut down.

Dennis Gartman, of the Gartman Letter, said investors should take a look at the stock when it drops to $16.25. He and others in his company were wondering what was in the company's 28-cent restructuring charge.

Gartman said the market is still trying to sort the earnings report and figure out which metal is best to be in. Guy Adami said he's staying away from Alcoa and going with

Freeport McMoRan

(FCX) - Get Report

.

Gartman agreed, saying Freeport could double in the next 24 to 36 months. He said the metal companies in general have done a good job getting lean and increasing productivity.

Lee shifted the panel's attention to the slump in oil. Terranova said weather concerns, China's imports and the free fall of the dollar have resulted in a terrible performance by natural gas and heating oil. As a result, he said he's shorting oil. Seymour said the "dirty" metals is the place investors should gravitate.

Najarian said investors can still play oil with integrated names like

BP

(BP) - Get Report

and

Chevron

(CVX) - Get Report

. He said BP is especially attractive for its dividend yield, cash sheet, diversified operations, and natural gas purchases in the U.S.

Lee said

Electronics Arts

(ERTS)

was also taking a beating in after-hours trading, down 8%, after it had announced its fourth quarter will be worse than expected.

Najarian said Electronic Arts and

Take-Two Interactive

(TTWO) - Get Report

are cheap enough to be considered takeover targets for someone.

Shifting to the financials, Seymour said there are expectations in the sector for more normalized earnings from the banks as loan loss provisions come down. Adami, though, said

JPMorgan Chase

(JPM) - Get Report

may be heading for a rough time next year if noted bank analyst Meredith Whitney is correct in her lower fourth-quarter forecast.

Is there a technical pattern to the way companies are approaching the earnings season. Carter Worth, chief market technician at Oppenheimer, thinks so. He said there are stocks like

Yum! Brands

(YUM) - Get Report

which move within a defined range before they pop.

On the other hand, there are stocks like

Advanced Micro Devices

(AMD) - Get Report

which are set up for a fall after being having been aggressively repriced. He said the same could be said about

Salesforce.com

(CRM) - Get Report

, which has been getting way ahead of itself after jumping from $25 to $75.

In the overseas trading segment, Seymour discussed the China's growing auto market. He said China has surpassed the U.S. as the top auo market in the world, with 13.8 million units sold in 2009 vs. 10.4 million in the U.S.

He said the auto markets are growing rapidly in China, India and Brazil. He expects

Toyota

(TM) - Get Report

to be in the best position to capitalize on this emerging-market growth. Seymour also liked

Ford

(F) - Get Report

but said its valuation is absurdly high.

Lee in Michael Khouw, a senior equity derivatives trader at Cantor Fitzgerald, to talk about which financial companies might be raising dividends this year. He said the options activity in

JPMorgan Chase

(JPM) - Get Report

suggests it may be raising its dividend to $1 by the end of the year. He also sees

Pimco

(PNC) - Get Report

doubling its dividend from 10 cents to 20 cents.

Najarian said investors shouldn't be buying stocks on the basis of dividends. However, Seymour said the raising of dividends can be interpreted as a healthy sign that companies are returning to normalized earnings.

Bob Pisani, a CNBC reporter who was attending an ETF conference, said the currency ETF that is enjoying the biggest inflows has been

PowerShares DB USD Bull

(UUP) - Get Report

. "Everyone's piling in," he said.

He said another strong currency ETF has been

Australian Dollar Shares

(FXA) - Get Report

which has rallied on the strength of the commodities markets in that country.

In the final trades, Seymour liked

U.S. Steel

(X) - Get Report

at $58. Adami was a buyer of

Cablevision

(CVC)

; Terranova liked the

GBP Sterling Shares

(FXB) - Get Report

; and Najarian liked

United States Bancorp

(USB) - Get Report

.

-- Written by David Tong in San Francisco

To watch replays of Cramer's video segments, visit the Mad Money page onCNBC

.

"Check out

"'Fast Money'Portfolios of the Week" on Stockpickr every Thursday.

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