3 Stocks I Saw on TV
FinancialsFinancials are never far from the minds of investors and two big U.S. financials get negative attention from analysts on Wednesday. Meredith Whitney places a hold on Jefferies ( JEF) after its 23% rise this week. It's notable since Whitney had been one of the most public backers of Jefferies when fears that it was overexposed to Europe almost doomed the company. Whitney's hold call shows that, after its big pop this week, lots of people are questioning the Jefferies move higher. Adami says that Whitney is taking down numbers because the entire financial space is in trouble. "The move in the stock was short-covering and I don't short the stock at $14, but I understand the hesitation." Ron Insana disagrees, saying you can still make a bullish case for Jefferies at $14, and it was a screaming buy at $10. Stephen Weiss is outright bearish on Jefferies, saying stay away: It's a middle-market player that is getting squeezed. Todd Hagerman, Sterne Agee analyst, downgraded the darling of the U.S. financials, JPMorgan ( JPM), saying that it's a call on the whole sector really and the fact that investors and banks won't admit the magnitude of reform globally. The five most vulnerable financials are the big broker dealers, and while JPMorgan has earned a following in the next few years, it is quite vulnerable, in the opinion of the Sterne Agee analyst. "To think it can revalue appreciably higher than today is hard to see." Stephen Weiss says the best and quickest way for European banks to get capital ratios in line is to pull in credit lines, and that means U.S. banks get to steal that share. However, Hagerman says, even after taking share over the course of the year, the bigger problem is that the capital markets and mortgage business remain weak. The off-balance sheet risk of these companies will not end well and may overwhelm incremental market share accumulated in the short term.
Secondary Market DarlingsIs the secondary market getting too crowded? Knight Capital got into the secondary market where Facebook is king and that leads to questions of a bubble, but author James Altucher says the Knight Capital move is a positive, bringing more efficiency to what has been an opaque market. Liquidity has been the issue and the Knight Capital entry means a more efficient, regulated market to handle buying and selling rather than the "wild west" markets of today, which has led to a valuation on Facebook north of $100 billion. Altucher also says it is time to raise the 500 shareholder limit to 2,000 shareholders for these companies trading on the secondary market. Altucher downplays the negative attention garnered by these secondary market darlings, like Groupon ( GRPN), which is "trading fine at $22," and LinkedIn ( LNKD), "doing fine," and Zynga ( ZYNG), which, even with its problems since it went public, still has $7 billion market cap; for a three-year old company, that's pretty impressive. "Public markets haven't been that bad for these companies, but companies are being forced to go public because once you have more than 500 shareholders you have to go public at that point. The gun was to their head. Zynga wouldn't have gone public without that," Altucher says. Do macroeconomic concerns mean that these companies can't do much better? Altucher says the more relevant metric is advertising and it's a half-trillion dollar market and these companies are only getting a fraction of it. Facebook could get 10%, at minimum, and it's ready to go public. Altucher doesn't know if Facebook deserves a $100 billion valuation, but it remains a good candidate for an IPO, regardless of the secondary-market to IPO route concerns. Also, the advertising formula is more important than the macro concerns.
How to Play Holiday ToysWith no clear "hot gift item" this season, is there a retailer who stands to benefit? CNBC business reporter Darren Rovell says that without any hit toys, it's just a question of price. That means, cutting deepest on pricing is the winning strategy and that means Wal-Mart ( WMT), but it's already being reflected in the market action. Wal-Mart shares are near highs not seen since 2008. Leapfrog Enterprises ( LF) is a particular learning gift company near a high, and Mattel ( MAT), the stalwart of the toy industry, continues to be strong, near an all-time high on Wednesday.
Highs and LowsStarbucks ( SBUX) seems to hit a new 52-week high daily and there is no reason not to stick with it. The trend has been to send the 52-week high stocks higher and the 52-week low stocks lower; that bodes well for Starbucks. The Fast Money gang also likes IBM ( IBM) over Amazon ( AMZN) in a battle of 52-week high and low tech stocks. IBM has come off its 52-week high, and Amazon remains down near a 52-week low, but Fast Money experts say there is much more visibility for IBM in its market, so choose it over Amazon. -- Written by Eric Rosenbaum from New York
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