'Fast Money' Recap: Apple Roars

NEW YORK ( TheStreet) -- Apple ( AAPL) shares roared higher on a blowout earnings report in afterhours trading on Monday before pulling back.

Apple blew past estimates, posting $6 billion in profits, or $6.43 a share, on $26.74 in revenue in the past quarter. Analysts were expecting $5.38 a share and $24.38 billion.

For the day, the Dow Jones Industrial Average rose 50.55, or 0.43%, to 11,837.93, while the S&P 500 rose 1.74, or 0.13%, to 1,294.98. The Nasdaq added 10.55, or 0.38%, to 2,765.85.

Pete Najarian said on CNBC's "Fast Money" TV show that Apple's performance was unbelievable as it delivered on every metric. Apple had gross margins of 38.5% and sold 19 million iPods, 7.33 million iPads and 4.1 million Macs.

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 on TV

Joe Terranova said Apple shows no signs of letting up, with strong guidance going forward. Guy Adami was impressed with its operating margin of 29.3 percent and the average blending price of Macs coming in at $1,313.

Brian Kelly was impressed with the Mac sales because he believes that will be a growth area for the company. He said the new apps store for the Macs has been well received.

Jon Fortt, a CNBC tech reporter who was listening to the conference call, said COO Tim Cook said the company hasn't been able to keep up with the strong demand for the iPhone 4. Cook said the average selling price for iPhones won't be declining.

Ryan Jacob, of the Jacob Internet Fund, said his fund sold shares of Apple, though it still remains the largest stock in the portfolio. He said Apple's bench strength is "top notch" but that Steve Jobs is a unique CEO that is an integral part of the company's future. He said he would consider buying back shares if Apple fell to 10 times forward earnings net cash.

IBM ( IBM) was the other big tech earnings story. Adami said IBM turned in the best quarter in its history, with a gross margin of 49% and a blacklog worth $142 billion. He said the valuation of the stock is fair and sees it going up to $200 in the next six months.

Terranova said IBM's performance is a testimony to the spending in software and services.

Jon Najarian said IBM has managed to score competitive wins against Hewlett-Packard ( HPQ) and Dell ( DELL). Terranova said the latter two companies must be thinking what they must spend to buy growth in order to catch up with IBM, but Pete Najarian said he thinks H-P is faring much better than that and is right behind IBM.

Zach Karavell said IBM has reached beyond the domestic market and is growing overseas, with 19% of its revenue coming from the BRIC nations and 21% from other growing markets. He said IBM is a software-services company but trades like a hardware company with a multiple of 12.

Karavell, who owns IBM, said he's thinking about putting more money in the stock because IBM's core businesses keep growing and growing.

With gold closing higher today, Kelly said he was getting back into the metal. He argued that gold is attractive because there's a huge imbalance in the global financial system, with Bernanke expanding money supply and the rest of the world raising rates. Karabell, though, said it was difficult for him to believe investors would gravitate to gold as an inflation hedge when the equities markets are doing so well.

Mosaic ( MOS) rose today after Cargill agreed to spin off its 64% stake in the company. Kelly said the move means Mosaic could be in play, with BHP Billiton ( BHP) a likely suitor.

Meanwhile Cree ( CREE) got hammered when its profits didn't meet estimates. Adami said margin compression has sent the stock spiraling down. "The shorts are leaning into the stock."

Shifting to Goldman Sachs ( GS), which reports its earnings Wednesday, Jeffery Harte, a principal at Sandler O'Neill, said there is no reason to believe Goldman's results will be any better than that of Citigroup ( C).

He said investors will really be watching what Goldman has to say about the first quarter and 2011. He said investors may be underestimating how well Goldman adapts to economic growth and a strong capital markets environment. He also said Goldman may also start buying back stock.

Commenting on the four-day visit of Chinese president Hu Jingtao to Washington, Andy Busch, a strategist with BMO Capital Markets, said he's looking ahead to China's CPI, PPI and GDP numbers on Wednesday, which he expects will be softer than the markets are looking for.

For that reason, he said he would be buy the Aussie dollar and the iShares Trust FTSE/Xinhua China 25 Indext ETF ( FXI).

Over the long haul, he's worried that China would drag its feet on inflation, saying that would be a problem for both China and the U.S. He said he would be a seller of U.S. Treasuries in the second half.

In the final trades, Karavell liked GT Solar International ( SOLR). Terranova liked Google ( GOOG). Adami liked McDonald's ( MCD), while Kelly liked the oil trade and Denbury Resources ( DNR). Pete Najarian chose Canadian National Railway ( CNI).

--Written by David Tong in San Francisco.

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