'Fast Money' Recap: Financial Sector Follies

NEW YORK (TheStreet) -- After initially selling off, the S&P 500 closed positive on Monday, finishing higher by 0.19%.

On CNBC's "Fast Money" TV show, the trading panel discussed the financial sector. 

Guy Adami, managing director of stockmonster.com, said the sector has been painful for investors over the past month. However, the stocks have done very well over the past several years. His top picks included Blackstone (BK), U.S. Bancorp (USB) and Wells Fargo (WFC). 

Brian Kelly, founder of Brian Kelly Capital, said financial stocks are "really tough" to own at current levels. Ifthe economy seemed like it was improving -- which it isn't, he says -- he would be a buyer of steel stocks instead of financial stocks. 

Karen Finerman, president of Metropolitan Capital Advisors, said she still likes JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C). She added that the financials have low valuations but may need more time before rewarding investors. 

Pete Najarian, co-founder of optionmonster.com and trademonster.com, is a buyer of JPM and BAC but is waiting for bullish options activity to confirm his long thesis. 

Gerald Storch, former vice chairman at Target (TGT), called it a "tremendous company with a great future." He added Target needs to improve three things: e-commerce, supply chain management and its Canadian operations. He said the security breach was a one-time event. He is not a seller of the stock. 

Adami disagreed, saying Target has not been acting well. He was a short-term buyer of Abercrombie & Fitch (ANF). 

Finerman said she likes shares of Target but suggested that there is more bad news on the horizon. For now she is holding off on buying the stock. Kelly said investors should avoid shares of Target. 

Najarian wondered who would be the new CEO for Target and pointed out how difficult it is for the retail companies in the current environment. 

Kelly said he is a seller of American International Group (AIG).

Apple (AAPL) closed north of $600 for the first time since 2012. Najarian said the stock looks to be breaking out but the company needs to prove that it has innovative products. He noted the bullish options activity in the weekly options, which expire Friday. 

Adami said he likes Home Depot (HD) and Mohawk Industries (MHK) but was not a big believer in the overall housing market. 

Najarian -- who is not a seller of housing -- said investors who are looking to short the homebuilders should sell the iShares U.S. Home Construction ETF (ITB), not the SPDR Homebuilders ETF (XHB). 

Kelly said he is a seller of the ITB, with the expectation that housing will underperform as the economy worsens. 

Adami said investors should buy Whole Foods Market (WFM) if it has a moderate selloff.

Eric Hippeau, managing director of Lerer Ventures, was a guest on the show. Regarding Twitter's (TWTR) share lockup expiration on Tuesday, he said it should be a "non-event." He suggested that the stock is oversold from its recent earnings report but admitted the company needs to make its platform more appealing to the broad public. 

Najarian pointed out the bullish options activity in shares of Nike (NKE), specifically the 9,000+ June $75 call options that were bought on Monday. 

CNBC's John Jannarone said JD.com should not be compared to Alibab, since the latter is so much more impressive. While Alibaba is wildly profitable, with 50% operating margins, JD.com is not yet profitable. JD.com sold $5.8 billion in gross merchandise in 2013, compared to the roughly $250 billion in gross merchandise sales for Alibaba. 

Najarian said he continues to like Yahoo! (YHOO), calling it cheap at current levels. 

Dennis Gartman, editor and publisher of The Gartman Letter, said oil stocks have done well but suggested  crude oil prices seem likely to go lower. He is a buyer of coal stocks, especially if natural gas can stay above $4. 

Najarian said Exxon Mobil (XOM), BP plc (BP) and ConocoPhillips (COP) are all breaking out to the upside. 

GameStop (GME) fell 4%. Finerman could not explain the drop, nor did she say whether she is a buyer or a seller. 

Pfizer (PFE) dropped 3%. Adami wasn't impressed with the earnings report but was a buyer of the pullback. 

Chipotle Mexican Grill (CMG) climbed 2%. Najarian was a buyer of the stock, calling the recent selloff a "great opportunity."

Salesforce.com (CRM) popped 2%. Kelly said he is a seller of the stock near $57. 

Mariko Gordon, founder and CEO of Daruma Capital Management, is long Electronics for Imaging (EFII) because of the earnings per share potential in its manufacturing of ink for ceramic tile printing. She likes Western Digital (WDC) and Pacira Pharmaceuticals (PCRX), the latter having an impressive post-surgical pain relief product. It is a possible takeover target and could realistically hit $150 per share, she said. 

Najarian liked shares of WDC at current levels as well as Seagate Technology (STX). He said both stocks "have plenty of upside" and are still cheap in valuation. 

Adami said he is worried about the commoditization of Western Digital and Seagate Technology's businesses, but admitted that that has yet to happen. 

For their final trades, Kelly was a seller of Constellation Brands (STZ), while Finerman was a buyer of Macy's (M) and a seller of the SPDR S&P Retail ETF (XRT). Najarian was a buyer of ConocoPhillips and Adami was a buyer of BP plc. 

 

-- 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.

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