'Fast Money' Recap: Jumping Into Retail

NEW YORK (TheStreet) -- The S&P 500 barely closed higher Thursday. On CNBC's "Fast Money" TV show, the traders were jumping into the retail trade. 

Josh Brown, CEO and co-founder of Ritholtz Wealth Management, said Sears Holdings (SHLD) has been in bad shape for years. He said the management is a mess and the technicals are terrible. 

Guy Adami, managing director of stockmonster.com, suggested investors think twice about shorting the stock since the short interest is already very high. 

Brian Kelly, founder of Brian Kelly Capital, said he would buy Family Dollar Stores (FDO) as a trade after it sold off on Thursday due to its earnings report. 

Dana Telsey, CEO and chief research officer of Telsey Advisory Group, was a guest on the show. Overall, the holiday season was disappointing and traffic was weak, she said. Urban Outfitters (URBN) is one of her top picks for 2014. She added that TJX Companies (TJX) could benefit from unsold inventory at other retailers. 

Steve Grasso, director of institutional sales at Stuart Frankel & Company, said Abercrombie & Fitch (ANF) has resistance near $38 to $40, but could increase as much as $20 per share from current levels. He added that URBN could have up to $7 per share in upside.

Adami said he would not sell ANF and said it could move above $40.

Brown likes Finish Line (FINL) because it is cheap on a cash-flow-to-enterprise-value basis. He added that each pullback has been greeted by buyers. 

Kelly revealed his new short position: Europe. He did so by shorting the Eurostoxx 50 futures. He reasoned that the economies are beginning to slow and the stocks are overextended. He added that a slowdown in China would hurt Europe since it is Europe's biggest customer. 

Brown completely disagreed. He's a buyer of Europe via the Vanguard FTSE Europe ETF (VGK). He added that valuations are low and the European stock market has a lot of ground to make up in the global recovery rally. 

Adami said Celgene (CELG) still has value at current levels, along with Gilead Sciences (GILD). He suggested buying Amgen (AMGN) with a $117 stop-loss. 

Brown said SolarCity (SCTY) was the new "king" of the residential solar market now that it is leasing its units to customers. He admitted the stock is expensive but said it could stay that way for a long time. He is long First Solar (FSLR). 

Grasso is a buyer of Ford (F) after it announced a 25% increase to its dividend. He said the balance sheet is strong and the company offers solid products. 

Guest Michael Burns, vice Chairman of Lions Gate Entertainment (LGF), said content has become an impulse buy for consumers since they can purchase it so easily and at the price point they want. He added that international box office sales are growing. The demand for content remains strong, he concluded. Digital revenue at LGF were up 47% in 2013. 

Adami said the stock is not trading well. He suggested buying it after it breaks out over the $32 or $33 level. 

Richard Kovacevich, former chairman and CEO of Wells Fargo (WFC), was a guest on the show. He said the banks are being unfairly targeted by the government amid a slew of fines. He added that the rise in stock price is appropriate for the healthiness of the banks. 

Although costs have come down, growing revenue will be the challenge going forward, he said. Kovacevich concluded the banks' credit is terrific and shares should continue to rally, especially if the Federal Reserve allows them to return more capital to shareholders. 

Brown was optimistic on the financials, saying he believes there is much more room to the upside. He added that, of all the sectors in the S&P 500, the financials have the lowest valuation.

Kelly disagreed, and said that over the short term the financials seemed likely to pull back based on the flattening out of the yield curve.

Buffalo Wild Wings (BWLD) was the first company on the show's "Pops & Drops" segment. Kelly was not a buyer of the stock. 

McKesson (MCK) jumped 3% and Adami said there is further room to the upside. 

Baidu (BIDU) fell 3% and Brown said he still likes the Chinese Internet stocks. He called the selloff a possible buying opportunity. 

Micron (MU) fell 2%. Grasso said there's nothing wrong with taking profits after a big move higher, but the stock seemed likely to trade up to $30.

Brown agreed with Morgan Stanley's downgrade of Yum! Brands (YUM) to hold from buy. He added that the improvements in China were fully priced in and he suggested taking profits. 

Grasso, although long Sprint (S), agreed with the buy to hold downgrade from Deutsche Bank. He said the stock has run too far, too fast and he was a buyer of T-Mobile U.S. (TMUS). 

Kelly -- who admitted he's been wrong so far about his bullish crude oil call -- said declining drilling rates increases the likelihood that oil will go higher. 

Adami suggested prospective buyers of Starbucks (SBUX) wait until the company reports earnings. If the stock sells off below $75, he considered it a buyer opportunity. 

Brown suggested investors do not try and play Facebook (FB) or Twitter (TWTR) into earnings. Grasso agreed. 

Kelly is a seller of Lumber Liquidators (LL), which seems likely to head lower. 

Grasso said Southwest Airlines (LUV) is a good stock to own for the red-hot airline sector. He also likes JetBlue Airways (JBLU).

For their final trades, Brown is a buyer of the iShares MSCI Europe Financial Sector Index ETF (EUFN) and Adami is buying Hexcel (HXL). Grasso said to buy Cree (CREE) and Kelly is selling the iShares MSCI South Korea Capped ETF (EWY). 

-- 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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