3 Stocks I Saw onTV
NEW YORK ( TheStreet) -- Shares of IBM ( IBM - Get Report) were trading lower in after-hours trading on Tuesday after it beat analysts earnings and sales estimates and raised its earnings outlook for 2010. At the close of trading today, the Dow Jones Industrial Average rose $115.78, or 1.09%, to 10,725.43, while the S&P 500 gained 14.20, or 1.25 %, to 1,150.23. The Nasdaq jumped 32.41, or 1.42%, to 2,320.40. Melissa Lee, the moderator of CNBC's "Fast Money" show, said IBM's report felt a little like Intel's ( INTC). For a breakout of some stocks from a recent "Fast Money" TV show,check out Dan Fitzpatrick's "3 Stocks I Saw on TV."
Guy Adami wondered where Big Blue's growth is going to come from and said the stock is a tad ahead of itself Tim Seymour agreed, saying IBM faces stiff competition in the software sector. Joe Terranova said investors should look beyond IBM and Intel at other tech plays like Dell ( DELL) and Qualcomm ( QCOM - Get Report) that are seeing "recovering demand." Seymour said IBM is well positioned to do well in the emerging markets, especially in China where it is making a big push. Lee, though, referred to earlier comments by Brian Marshall, an analyst at Broadpoint Am Tech, who believes that IBM is already fully priced and needs something like an acquisition to "move the needle" this year. Adami said the better tech play is in the storage space in stocks like Western Digital ( WDC - Get Report) and Seagate ( STX - Get Report). Lee said the health care stocks are trading as if health care reform is dead. Finerman said health care reform is on life support regardless of outcome in the Massachusetts Senate race.
She said HMOs and medical device companies will be elated if Democratic candidate Martha Coakley loses. However, she cautioned that there may be another effort to pass some form of health care legislation. Adami agreed, adding he would short UnitedHealth Group ( UNH) under the circumstances. Seymour said it is difficult to trade in this space, adding the administration is still going to try to get some sort of reform through. Dan Clifton, head of policy at Strategas Research Partners, said a victory by Republican candidate Scott Brown would benefit managed care, pharma, home health care, and device makers. He said a Coakley victory would benefit hospitals and Medicaid HMOs. Lee asked the panel what impact Citigroup's ( C) earnings will have on other banks that report this week. Finerman said the earnings reports of JPMorgan Chase ( JPM) and Citigroup lowers the bar for Bank of America ( BAC). However, she said Citigroup's fixed income results doesn't bode well for Morgan Stanley ( MS) and Goldman Sachs ( GS). Adami said Wells Fargo ( WFC) sets up nicely for a short. Lee brought in Whitney Tilson, founder and managing partner of T2 Partners, to comment on a vote on a 50-1 split in Berkshire Hathaway Class B ( BRK.B). He said the Berkshire board is expected to take that action Wednesday, lowering the value of the shares to $65. He said that move could be a catalyst for the stock if the stock is added to the S&P. If that were to happen, funds would step in and pick up the stock. Tilson was cautious about the housing market, saying that housing sales were tumbling at the end of the year and that foreclosures remains a problem, despite the government's mitigation efforts. He said he's been selectively avoiding and shorting stocks in the industry.
Lee noted at Cree ( CREE - Get Report) was up 10.41% today. Despite its rich valuation, Adami likes the stock. He said the company has raised its gross margins to 47.5% , is running its business better and is seeing its earnings catch up to its valuation. He said investors should try to get into the stock on pullbacks. Apple ( AAPL) is slated to unveil its tablet on Jan. 27. Mark Mahaney, the Citigroup U.S. Internet analyst, said the success of Apple's iSlate would depend on the company's ability to aggressively price the product. He expects Amazon.com ( AMZN) to lower the price of its Kindle to $200 in six to nine months. He also said Apple would have to match the number of book titles that Amazon offers with Kindle. Terranova said it will be interesting to see how much Apple provides content providers. He said Amazon keeps the lion's share of content revenues. Adami said he expects Amazon to dip further, adding a good entry point for the stock would be $106. Lee said the iSlate might cannabilize Apple's other products, but Seymour said Apple has done a good job in the past of making "people need the next thing." Lee brought in Zachary Karabell, president of River Twice Research, to comment on Google's ( GOOG) recent stumble in China. Karabell said Google is having problems getting traction in areas like information technology that are tied closely to the government and regulators. He said the best play would be go with Chinese new economy companies like Sina ( SINA - Get Report), Shanda Games ( GAME) and Netease.com ( NTES - Get Report).
He also listed some "old" U.S. companies that are leveraged to growth as plays: Honeywell ( HON), Yum! Brands ( YUM) and Nike ( NKE). In the final trades, Seymour advised taking some off the table on Mechel OAO ( MTL). Adami said to get into Hewlett-Packard ( HPQ) if it gets whacked on IBM. Terranova said he liked Freeport McMoRan ( FCX). Finerman did not have a pick. -- Written by David Tong in San Francisco To watch replays of Cramer's video segments, visit the Mad Money page onCNBC. "Check out
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