3 Stocks I Saw on TV
NEW YORK ( TheStreet) -- The markets closed lower Wednesday on concerns about the U.S. economy. The Dow Jones Industrial Average was down 39.81, or 0.38%, to 10,497.88, while the S&P 500 fell 7.71, or 0.69%, to 1,106.13. The Nasdaq also fell 23.69, or 1.04%, to 2,264.56. Jon Najarian said on CNBC's "Fast Money" TV show said that Sanofi Aventis ( SNY) was going to make an offer soon for Genzyme ( GENZ) worth $20 billion. He said the premium was already built into Genzyme stock which had risen 30% in the past four trading sessions. For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."
Because of the premium, Najarian said he had sold his Genzyme shares today for $72 to $73. Joe Terranova said he found it less risky to trade on the potential deal by buying SPDR S&P Biotech ( XBI). Terranova believed the stock could go higher if other competitors like GlaxoSmithKline ( XBI) enters the mix. Dr. Mark Schoenebaum, an ISI Group analyst, said the offer will likely come soon between the low $70's and $80 a share. He said Genzyme is worth a lot because it's one of three companies in the biologics space that big pharma prizes. The other companies are Amgen ( AMGN) and Biogen ( BIIB). Melissa Lee, the moderator of the show, shifted to the tech sector, where Akamai ( AKAM) and Symantec ( SYMC) were trading lower in afterhours. Brian Kelly said the selloff in Akamai was expected after a huge runup in the stock this year. He said investors are waiting to hear about a new catalyst for the company. Najarian said he liked Akamai and would buy it on the dip Thursday. On the other hand, Najarian said he was troubled by Symantec's light revenues. Lee noted that Research In Motion ( RIMM) was rising in afterhours. Tavis McCourt, an analyst with Morgan Keegan, said RIM's new touch-screen phone will allow the company to go after the high-end market with reasonably good gross margins. He said the success of the new phone will hinge on the marketing program and quality of the software.
Lee noted a sharp increase in short positions in major tech stocks. Najarian said the selloff occurred in tech stocks because investors are taking profits after a runup in the stocks. Steel was down today, and Steve Cortes chastised Arcelor Mittal ( MT) for blaming a slowdown in China for its disappointing earnings report that saw it miss its revenue estimate by $2 billion. He said the company should have shoulder the responsibility for its report. Lee noted another M&A deal in the works with Avis Budget ( CAR) making a $1.3 billion bid for Dollar Thrifty Automotive Group ( DTG). Lee brought in David Levy, of the Jerome Levy Forecasting Center, to comment on a weak economy and declining bond yields. Levy said the move of the economy toward deflation and a recession will bring down the yields on Treasuries. He predicted the 30-year Treasury bond will drop to 2% from 4% next year, while the 10-year Treasury note will drop under 1.5%. He said the economy is sad shape, with the core CPI slated to increase less than 1% for the second half and with profits having peaked in the second quarter. He warned of significant disinflation in wages. Is a higher dividend a better gauge than earnings of a company's health? Dennis Gartman thinks so. He said a company that can pay and cover dividends has made an assumption that earnings will get continually better. He admitted to the other panelists the dividend play is for investors who are interested in old guard companies like Johnson & Johnson ( JNJ). Merck ( MRK) was the focus of the quick 360-degree review, and the opinions were split. Seamus Fernandez, an analyst with Leerink Swann, was a buyer, saying the stock was the top pick in the group. Carter Worth, an Oppenheimer chartist, said he was neither bullish or bearish on the stock. And Brian Stutland, an options trader, said he was going to wait for a super spike in volatility before buying the stock. Lee brought in Adam Goldstein, president and CEO of Roya l Caribbean ( RCL), which was soaring in afterhours after beating earnings estimate and raising third quarter and full-year guidance.
Goldstein said the company is benefiting from a stable book environment. He also said customers are willing to pay a premium to travel on the company's latest ships. In the final trades, Terranova liked Wal-Mart ( WMT) Kelly liked Old Republic International ( ORI) while Finerman liked SPDR S&P Biotech. Najarian liked Akamai ( AKAM). -- Written by David Tong in San Francisco To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. "Check out "'Fast Money' Portfolios of the Week" on Stockpickr every Thursday. Follow TheStreet.com on Twitter and become a fan on Facebook.