'Fast Money' Recap: Something Isn't Adding Up

NEW YORK (TheStreet) -- In a volatile up-and-down trading session, the S&P 500 ended lower by 0.14%, while the Dow Jones Industrial Average closed up 0.20% and the Nasdaq slipped for the third straight session, ending lower by 0.40%. 

On CNBC's "Fast Money" TV show, Tim Seymour, managing partner of Triogem Asset Management, pointed out the Russell 2000 broke below its 200-day moving average. He added the weakness in the Nasdaq and Russell 2000 are not surprising given the high valuations compared to the S&P 500. 

Guy Adami, managing director of stockmonster.com, agreed with Seymour. He added the stock market's strong performance over the past year would have investors thinking the economy is doing much better than it is. However, until bond yields go higher to confirm the improved economic activity, something isn't adding up, he reasoned. 

Dan Nathan, co-founder and editor of riskreversal.com, agreed with Seymour that at 16 times next year's earnings, the S&P 500 is not expensive. However, he admitted that it could be too expensive, if economic growth slows too much. 

Anthony Scaramucci, founder and co-managing partner of SkyBridge Capital, said that it's hard for stocks to move higher when investor sentiment is so bad. It's even harder for certain stocks to rally when the fundamentals are poor. 

Missouri is looking to join Texas, Arizona and New Jersey as states that ban direct auto sales to consumers. The move could be another blow to Tesla Motors (TSLA), which solely relies on direct sales. Matt Hardigree, editor-in-chief of Jalopnick, an auto industry blog, was a guest on the show. 

He said the auto dealers have a "political clout" in their states but no public support. On the other hand, Tesla has plenty of public support but no political clout. He reasoned that Tesla and the auto dealers will meet somewhere in the middle by limiting the number of Tesla showrooms in the state. He argued that customers will find a way to get a Tesla Model S or Model X if they want it, but this infrastructure will hinder the automaker from selling as many vehicles as it hopes in the future. 

Nathan said he would be a buyer of Tesla near $150 or $160. Seymour said he wouldn't buy the stock until it is closer to $80, pointing out the increasing competition in the space. 

Nathan was a seller of Netflix (NFLX), saying that increasing competition will ultimately hurt the stock price.

Seymour said he would buy shares of Amazon (AMZN) near $250. Adami agreed. 

Scaramucci said he was neither a buyer or a seller of Amazon and Netflix. He called the valuations "crazy." 

Priceline.com (PCLN) is not an expensive stock in terms of valuation, Adami argued. He reasoned that the stock has been dragged lower over the past month during the selloff of momentum stocks. 

Seymour agreed, calling Priceline.com "one of the great monopolies" and a "global franchise." Scaramucci said PCLN could rally if the overall market moves higher. 

Twitter (TWTR) was the featured company on the show's "Street Fight" segment. Seymour was bullish on the stock over the short term, saying it has "relative value" at current levels. He added that it is cheaper than Facebook (FB) on a price-to-sales basis. He is long the June $32 call options. 

Nathan was bearish on shares of Twitter, saying he expects the stock to eventually hit its IPO price of $26. He added that another share lockup expiration will transpire in roughly 90 days, which is likely to weigh on the stock price. 

Adami said Twitter seems likely to rally at current levels. 

Aswath Damadaran, professor of finance at NYU Stern School of Business, was a guest on the show. He valued Alibaba at $140 billion post-IPO, calling the e-commerce giant a "phenomenal money-maker." However, due to the company's lack of clarity about its investments, possible growth constraints and potential Chinese political strains, he was leery about putting a higher valuation on the company. 

He added that if Alibaba can grow revenue at 40%, the stock should be worth between $180 billion to $200 billion. If it only grows revenue 25%, then the valuation should be closer to $120 billion. The valuation ultimately depends on two things: what revenue growth rates Alibaba can sustain, and how much the Chinese e-commerce market will grow over the next five years. 

Seymour argued that even at a $145 billion valuation for Alibaba, shares of Yahoo! (YHOO) should still be trading near $40. 

Dan Niles, founding partner of AlphaOne Capital, said he is a buyer of Google (GOOGL) and suggests the company will be better once it completely separates from its Motorola business. He is a seller of Microsoft (MSFT), saying the company may struggle with the handset business it acquired from Nokia (NOK).

Adami said he agreed with the long Google call but warned investors about shorting shares of Microsoft. Nathan seemed to agree with the short Microsoft call, saying it could decline 10%. 

Tiffany & Company (TIF) jumped 3% and was the first stock on the show's "Pops & Drops" segment. Scaramucci said he is a buyer of the stock. 

FedEx (FDX) dropped 1%. Adami stressed that the stock needs to hold $130. 

Molson Coors Brewing Company (TAP) popped 2%. Seymour said to stay long. 

Ford (F) climbed 2%. Nathan called the stock cheap but suggested traders who are long the stock use $15 as their stop-loss. 

Nathan said shares of Costco Wholesale (COST) are too expensive at 25 times next year's earnings, given that the company's growth rate is in the low single digits. Costco reports earnings later this month and he is long the May 30th expiration $113 put options. He reasoned that the stock could fall 10%. 

Seymour called Costco expensive compared to its peers. Adami said investors who are long need the $110 level to hold in shares of COST. 

Nathan pointed out the bullish options flow in Kate Spade (KATE). Adami said investors can be long the stock at current levels. 

Seymour noted CBS Corp. (CBS) reported disappointing revenue. However, he liked the stock's valuation, EPS growth and discount to its sector. He is a buyer at current levels. 

Adami is a buyer of Symantec (SYMC), despite the resistance near $21. 

Nathan is a buyer of Nvidia (NVDA) at $17. 

Apple (AAPL) is reportedly in talks to buy Beats Electronics for $3.2 billion. Seymour said this is not likely the acquisition that investors want to see. 

Nathan called it a very "un-Steve Jobs move," in reference to the late CEO.

-- 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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