'Fast Money' Recap: Buying Retail?

NEW YORK (TheStreet) -- The markets were finally able to break their losing streak Tuesday, but still sold off in the final 30 minutes.

All the talk the last couple of weeks has been centered around the retail sector and its underperforming companies. On CNBC's "Fast Money" TV show, Karen Finerman said it's been a tough couple of weeks for bulls but she still likes Foot Locker ( FL) and Macy's ( M).

She added that she does not like J.C. Penney ( JCP) or teen retailers.

Brian Kelly said he doesn't really like the sector but would look to AMZN ( AMZN) and RadioShack ( RSH) as his top plays.

Steve Grasso said he continues to like Deckers Outdoor ( DECK) and Home Depot ( HD), but added that the big reversal in the latter shows that investors are skittish.

Paul Hickey said interest rates would be important to watch and could curtail consumer spending. However, he countered this negative point by saying the jobs outlook is positive and gas prices continue to go lower.

Grasso said he wants to avoid J.C. Penney's because any slightly bullish, or not horrible, news could constitute a short squeeze, which could be seen on Tuesday after the company completely whiffed on earnings, yet rallied higher.

International Business Machine ( IBM) was the first stock on the show's "Today's Trending Trades" segment, after making new 52-week lows.

Hickey said he still was not a fan of the stock, despite Warren Buffett initiating a position in the company earlier this year. He cited the company's increased competition and issues surrounding its cloud-computing business segment as reasons the stock could go lower.

Barnes & Noble ( BKS) dropped after reporting earnings. Finerman said she wasn't impressed by the company. She pointed to declining Nook sales, a worse-than-expected quarterly loss and lower sales.

Lululemon Athletica ( LULU) dropped briefly on Tuesday, from ITG's comments calling for comp sales to come in at the lower end of the company's guidance. Grasso said he thinks the stock is still safe on the long side.

Hickey said the S&P 500 has been positive seven of the last 10 years in the second half of August, with the average gain totaling 1.73%. He added that consumer discretionary, tech and energy have been the best-performing sectors.

He added that the top 10 stocks over those 10 years have been: Phillips-Van Heusen ( PVH), Tiffany & Co. ( TIF), Advanced Micro Devices ( AMD), Tesoro Corp. ( TSO), Fossil ( FOSL), Quanta Services ( PWR), Salesforce.com ( CRM), American International Group ( AIG), Freeport McMoRan ( FCX), and Apple ( AAPL).

Grasso said he believes in the seasonality, but tapering talks from the Federal Reserve could be the one thing to slow down the end-of-August rally.

Brian Kelly said the tapering talk is likely priced into the market since it tends to be forward-looking and may not be affected all that much by Wednesday's FOMC meeting.

Hewlett-Packard ( HPQ) reports earnings on Wednesday and Kelly said he doesn't want to buy the stock ahead of earnings. He added that traders could short a move higher with a stop at $27.60.

Historically, Hickey said, the average move for Hewlett-Packard is down 2% following earnings. He would avoid it.

Grasso said he would wait to buy Tesla Motors ( TSLA) until it breaks out over $160 or tests and holds support at $133.

Best Buy ( BBY) was featured on the show's "Street Fight" segment. Hickey defended the stock, saying online sales have been strong and the company's price match policy is doing well.

Kelly countered by saying the company has hit relatively easy targets, attained mostly by cutting costs. He added that the biggest challenge for Best Buy will be growing from this point on. With year-to-date gains exceeding 190%, it's time to take profits.

LightinTheBox Holding Co. ( LITB) was the first stock on the show's "Pops & Drops" segment, after falling 40% on Tuesday. Finerman said she would definitely stay away from this one.

Netflix ( NFLX) popped 5%, making new 52-week highs. Hickey said the move has likely paved the way to $300.

Mike Khouw said he doesn't think it's a good time to buy Tesoro, which fell 1% on Tuesday.

Deere ( DE) also fell 1%. Grasso said farmers have more money to spend on equipment with the recent fall in fertilizer prices, and the stock is a good long-term pick.

Weyerhaeuser ( WY) was up 2% on Tuesday. Kelly said he likes the stock and the 3.2% dividend yield.

Finerman said she doesn't think it really matters if the Fed tapers its bond purchases in September or October or any point in 2013 since the market knows it's eventually coming. Kelly added the importance is actually the speed at which the Fed tapers rather than when.

On the show's "Trade of the Day," Finerman said she was watching Navios Maritime Holdings ( NM), which is up 77% in 2013 and has a 4% dividend yield. She said she preferred product and dry bulk tankers over oil and very large crude carrier, or VLCC, tankers, especially as day rates continue to climb.

For their final trades, Kelly was a buyer of the iShares 20+ Year Treasury Bond ETF ( TLT) and Hickey was buying Phillips-Van Heusen. Finerman said to buy H&R Block ( HRB) and Grasso was a buyer of Cree ( CREE).

-- Written by Bret Kenwell in Petoskey, Mich.

Follow TheStreet.com on Twitter and become a fan on Facebook.

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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