'Fast Money' Recap: Netflix Unplugged

NEW YORK ( TheStreet) -- The S&P 500 made a small push higher, closing at another all-time high.

The big news from Monday's after-hours session was the Netflix ( NFLX) earnings. On CNBC's "Fast Money" TV show, Pete Najarian said the stock is selling off because the company's forward projections were not quite as high as what investors had hoped to see.

He added that management has only done a modest job at international expansion and the European, Latin American and Canadian markets could be much stronger. He also said that according to the options pit, the stock was expected to move up or down by about $35, but has only move $20 in Monday's after-hours.

Dan Nathan also thought that was interesting, noting the stock has moved about 26% in its more recent earnings announcements. He added Netflix is going to have to figure out a way to grow into the current valuation, but thinks the stock will be rangebound between $200 to $300.

Guy Adami admitted that he got this one wrong when he said to buy it late last week ahead of earnings. But the stock might act like Google ( GOOG), which initially sold off on earnings before rallying hard.

Anthony Scaramucci said the stock is usually pretty volatile, but a lot of analysts like it because of the strong "managerial executions." However, he did say from a valuation perspective, owning the stock here was too hard.

Shifting to stocks that have had large year-to-date moves, Adami says investors can still own Celgene ( CELG). He pointed to the strong balance sheet and solid cash flow. After some negative headlines last week, the stock made another all-time high on Monday, showing the incredible strength in biotech stocks.

Nathan said to sell Micron ( MU), which is up roughly 120% year to date, citing the huge waves of recent insider selling. He said the stock collapsed after its earnings results in June and that he would be a seller north of $14.

Best Buy ( BBY) trades at only 10 times earnings and has a lot of cash on hand, making Najarian a buyer. He said the company is doing a much better job with its "mini store" concept and price matching, making it so customers don't walk in, check something out, and buy it online. Instead, consumers are buying it right in the store.

Scaramucci is a buyer of Hewlett-Packard ( HPQ), even with the stock up 79% since January. He said he's been a long-time holder of the stock and the company has made too many acquisitions, but CEO Meg Whitman makes the difference.

Kicking off the show's "Top Trades" was Yahoo! ( YHOO), the worst performer in the S&P 500 Monday on news the company would be buying back 40 million shares of hedge fund manager Dan Loeb's stake of 60 million shares. He will also be resigning from the board.

Nathan said there's a lot more risk in this name over the near term and that the Alibaba IPO would only slightly help. Investors will have to rely on Yahoo!'s core business after the autumn IPO. But Yahoo!'s second-quarter results were not very promising. He said he would be interested in buying near $26.

McDonald's ( MCD) reported earnings Monday and missed on the bottom line. Adami said that U.S. comps were some of the worst he's seen in recent years. He added that the stock has been making lower highs since May and you could look to buy it in the low $90s.

U.S. existing home sales fell 1.2% for the month of June and was the cause of some selling pressure in homebuilders such as PulteGroup ( PHM), Lennar ( LEN) and D.R. Horton ( DHI). Najarian said these companies have been remarkably strong and the pullbacks are buying opportunities.

Turning the focus to Apple ( AAPL) ahead of its third-quarter results late Tuesday, Najarian likes the stock. He said that from a valuation perspective the company is cheap due to having so much cash on hand and the $60 billion stock buyback program has put an artificial floor in the price. He added that a deal with China Mobile ( CHL) would get the stock to $500 in a hurry.

Nathan was more wary. He said the recent headlines regarding larger screens might delay the product launches Apple typically schedules for the fall. He also noted that a deal with China Mobile would mean lower prices and thus lower gross margins. However, he did say Apple would be a great buy should it sell off after the report.

Scaramucci said that right now Apple is only a value stock and the company seems to lack direction on the innovation side. He is slightly bearish on the stock until it proves otherwise.

Adami said Apple is a second-half story and that it has recently formed a nice double bottom. He added the stock has a lot of upside potential and little downside risk.

Dennis Gartman, publisher of The Gartman Letter said during his guest appearance that he liked gold at the beginning of July when it was around $1,250 per ounce. Now, with gold over $1,330 Monday, he's still a buyer.

However, he suggested the gold miners might actually be a better buy right now than gold, something he hasn't felt in about five years. But the miners have underperformed and have some catching up to do. He said he also expects stocks to move higher in response to the Federal Reserve's continued accommodation.

Najarian said the miners have been beaten up so bad they are due for a bounce. He also added that some pay nice dividends that could entice buyers to come in. However, rather than buying gold, he'd be a buyer of silver, saying it typically moves more than gold but in the same direction.

Scaramucci agreed with Gartman and is also a buyer of gold. He mainly cited his expectations for the Fed to remain accommodative for the economy and that, as a result, gold should go higher.

Nathan wasn't buying what Gartman was selling. Particularly, he didn't agree with the notion that gold and equities would both continue to climb. He pointed to the sluggish top-line growth that is becoming a common theme so far through this earnings season.

The "Tomorrow's Top Trades" segment featured United Parcel Service ( UPS), AT&T ( T) and Phillips 66 Partners ( PSXP).

Najarian said UPS' upside is still intact, even after it lowered the current quarter and fiscal year estimates. He added the stock held its 100-day moving average well.

After high dividend-paying stocks felt the pressure from a rising interest rate, Nathan expects AT&T to be challenged going forward, already down 9% from its highs this year. The company reports earnings Tuesday after the close. Phillips 66 Partners is a master limited partnership and will begin trading Tuesday. Adami said he wouldn't chase it,but expects it will be near the high end of its range, near $21. He added that Phillips 66 ( PSX) has had a nice pullback and traders could use the $56.50 to $57 level as their stop loss.

For their final trades, Najarian is a buyer of Genworth Financial ( GNW), which hit a 52-week high Monday. Adami is a buyer of Phillips 66. Scaramucci is a buyer of Teva Pharmaceutical Industries ( TEVA) and Nathan is adding to his Qualcomm ( QCOM) position ahead of earnings.

-- Written by Bret Kenwell in Petoskey, Mich.

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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