'Fast Money' Recap: Headwinds for Netflix?

NEW YORK ( TheStreet) -- The markets were down on Monday on lingering concerns about Greece's debt situation.

The Dow Jones Industrial Average was down 17.10, or 0.13%, to 12,845.13. The S&P 500 declined 0.57, or 0.04%, to 1,344.33. The Nasdaq lost 3.67, or 0.13%, to 2901.99.

Melissa Lee, the moderator of CNBC's "Fast Money" TV show, turned the trading panel's attention to Coinstar ( CSTR), which was up 15% in afterhours trading after agreeing to buy NCR's ( NCR) entertainment assets.

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

Under the $100 million deal, Coinstar, which operates Redbox's DVD rental kiosks, will be getting NCR's DVD kiosks, retailer contracts and DVD inventory. The two companies have also entered a strategic supplier arrangement. The deal coincides with a Redbox announcement that it would be entering into a subscription-based streaming partnership with Verizon ( VZ).

Coinstar's twin moves are viewed as a threat to Netflix ( NFLX).

Joe Terranova applauded the deal, saying Coinstar, which reported excellent earnings and guidance today, is positioning itself to do all the right things. He expressed concerns, though, about the possible drain on free cash flow.

Guy Adami said he liked Coinstar's operating margins, adding its valuation is not that rich.

Michael Pachtner, an analyst with Wedbush Securities who was in on the Coinstar conference call, praised the NRC deal, calling it "huge news." He said Coinstar officials commented in the conference call on interchange fees, a price increase, the Verizon partnership and Netflix attrition.

Pachtner said the stock, which was up 15% in afterhours, should drift up to $72. He has an outperform rating on Coinstar.

Brian Kelly said he was following the money and putting his money on content providers such as Walt Disney ( DIS) and Comcast ( CMCSA).

Options trader Scott Nations said options activity in Coinstar was nine times heavier than normal, with call activity outpacing put activity.

Lee shifted to a Morgan Stanley report that said that emerging markets were the best place to park investor cash, followed by Europe and the U.S.

Kelly questioned the choice of Europe, saying austerity measures will push the continent into a deep recession.

The Morgan Stanley report put emerging markets at the top of the list based upon compound annual growth rates, global share of the IPO market and strong EPS growth for the next 10 years.

Tim Seymour agreed with the choice, saying emerging markets, after a down 2011, are up 11% to 14% this year and usually perform well when fiscal policy is tight and monetary policy is loose.

Adami said one way to play to play emerging markets is through stocks with international exposure like IBM ( IBM).

Shifting to the energy space, Seth Kleinman, head of energy strategy for Citigroup, talked about a bull trade for gasoline. He said the trade is based upon a shortage of gasoline in the Atlantic basin and a strong pull from South America for Gulf barrels.

Terranova said his picks off this trade were HollyFrontier ( HFC) and CVR Energy ( CVI). Seymour said he liked Apache ( APA), adding it should benefit from the growth of shale oil production.

Lee noted Yum! Brands ( YUM) was up on a revenue and earnings beat. Adami said the stock, which trades at 20 times forward earnings, still has some upside. Kelly said he didn't know whether he wanted to pay that high a multiple for the stock.

Terranova said Yum! has made a conscientious effort to expand in China, with 4,200 stores and same-stores growth of 21% in the fourth quarter.

The panel shifted to discussion of upcoming fed rules on fracking and how they may affect service companies like Nabros ( NBR) and Halliburton ( HAL) if they were enacted. Kelly said he would stay from stocks with that exposure.

Lee brought in Seymour to talk about his recent trip to Russia. He said the western media is much more preoccupied with Russian politics and Putin's future than the Russian media. He also discussed the tense negotiations between Russia and China over a huge oil pipeline project. And he said the Russians believe fiscal austerity will lead to asset price deflation and hurt Europe's economy.

Seymour's best Russian plays were Internet-related: Yandex ( YNDX), VimpelCom ( VIP) and Mobile Teleystems ( MBT).

For the money trade, Willie Williams, a director of Societe Generale, recommended selling the Aussie Dollar against the Swiss Franc.

Lee brought in James Altucher, managing director for Forumula Capital, who predicted five years ago that Facebook would have a $100 billion valuation. He said the valuation is justified because it is the largest Website in history and continues to grow, as ad dollars move onto its platform. He said it's the world first global social network with no real competition.

His next call? He sees Apple ( AAPL) with a trillion-dollar market cap.

Grains were seeing some strength in the commodities markets. Dennis Gartman said the rise in wheat prices is due to severe weather problems in the Ukraine and Russia and diminished crop levels in South America.

In the final trades, Adami liked Human Genome ( HGSI). Kelly liked the iShares Barclays 20+ Year Treasury Bond Fund ( TLT). Terranova expects great earnings from Disney ( DIS) on Tuesday.

-- Written by David Tong in San Francisco.

>To contact the writer of this article, click here: David Tong.

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