'Real Money' Radio Recap: A Week of Role Reversal

Filling in for Cramer, Aaron Task laments a slowing economy.
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The stock market was turned on its head this week, Aaron Task said on the

RealMoney Radio

program Friday.

Filling in for Jim Cramer, Task, a co-executive editor of

TheStreet.com,

noted that countertrends ruled in the week that was. Sectors that had been performing well didn't perform well, and sectors that had been laggards performed better.

Task ran down the major financial news and economic data of the past five sessions. "What you saw this week was evidence of slowing economic growth and higher prices, something not conducive to higher stock prices."

Despite the countertrend and the poor economic data, Task cautioned that one week does not a trend make. "I would not extrapolate too much from this week's action."

Task's guest for the show was Cramer's research associate and

TheStreet.com's

Stocks Under $10 newsletter co-author, Will Gabrielski. Task asked Gabrielski about the macro environment for large-cap stocks vs. small-cap stocks for the rest of the year. Gabrielski said if the economy is slowing and people are worried about their money, one would expect large-cap stocks to outperform. "People don't buy speculative, low-cap stocks if they aren't confident."

Task also asked for an update on

Calpine

(CPN)

. Last week, Gabrielski wrote a bearish column warning about problems at the power company. He said that even though the stock is down 15% to 20% since he flagged it, there is still a lot of downside risk. "Nothing has changed."

A caller asked about

Gap

(GPS) - Get Report

, which reported second quarter results Thursday after the close and slashed earnings estimates for 2005. Task said he felt the stock wasn't down more today because it had fallen quite a bit prior to its earnings report. Gabrielski pointed out Gap is closing stores and downsizing its business, which has him concerned.

In response to a question about

Google

(GOOG) - Get Report

and the potential dilution from its planned secondary offering, Task said he wasn't too concerned. Google didn't get to sell as many shares in its IPO as it would have liked, and the company "hasn't done much wrong, so far."

Another caller asked about

Nabors Industries

(NBR) - Get Report

. Task said Nabors was the premier oil driller and was a name to buy on weakness. It is also a large-cap stock. Gabrielski agreed and suggested

Grey Wolf

(GW)

as a lower-cost way of playing the oil drillers. Gabrielski would wait, however, to buy Grey Wolf until its stock price fell another dollar or so.

In response to a question about

Quest Diagnostics

(DGX) - Get Report

, Task said Quest is in one of two sectors that have the ability to pass on higher prices: energy and health care. Gabrielski noted Quest recently announced an acquisition of a competitor,

LabOne

(LABS)

, which should give it even more pricing power.

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Another stock Gabrielski likes in the health-care space is

Allscripts Healthcare Solutions

(MDRX) - Get Report

, which makes software for PDAs. The software allows doctors to access medical records and write prescriptions wirelessly. Gabrielski said he expects accelerating revenue growth from Allscripts for the next two years.

A caller asked about

Tut Systems

(TUTS)

. Gabrielski said, "The company really hasn't done anything well in the past year. ... We're waiting on the elusive contract from them. I don't see any reason to hold the stock."

Finally, in response to a question about

OpenTV

(OPTV)

, a name in the Stocks Under $10 portfolio, Gabrielski said, "We still hold this stock. At some point, we really do believe interactive television is going to take off in this country like it has overseas."

Aaron L. Task is the co-executive editor of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

atask@thestreet.com.