'Fast Money' Recap: Look to Large-Caps for Growth

NEW YORK (TheStreet) -- The S&P 500 eked out a gain on Tuesday for its second consecutive record close. 

On CNBC's "Fast Money" TV show, Guy Adami, managing director of stockmonster.com, said investors can look toward large-cap industrial stocks for growth. Specifically, he likes General Electric (GE), Honeywell International (HON), and Boeing (BA). 

Tim Seymour, managing partner of Triogem Asset Management, said the U.S. economy needs to show growth in order for the industrial stocks to do well. He likes transport stocks such as FedEx (FDX). 

Karen Finerman, president of Metropolitan Capital Advisors, said the market will likely decline if economic growth slows too much, even if certain stocks are able to generate earnings per share growth. 

Dan Nathan, co-founder and editor of riskreversal.com, said if China can maintain 7% annual GDP growth it will be a great investment. He liked Baidu (BIDU). 

Seymour called small-cap stocks overvalued and was a seller of the iShares Russell 2000 ETF (IWM). 

Adami agreed the IWM could have further downside but said he would be more inclined to sell the exchange-traded fund on a break below the $107 level. 

Steve Grasso, director of institutional sales at Stuart Frankel, called in to update viewers on his positions. He sold his long positions in Amazon (AMZN), Bank of America (BAC), Abercrombie & Fitch (ANF), Hewlett-Packard (HPQ), and Qualcomm (QCOM). He added BAC is a good long-term hold but has lost its upside momentum for now. He is still long Twitter (TWTR). 

Adami said Abercrombie & Fitch is a possible takeover target and he would "stay with" the stock. 

Daniel Ives, managing director of FBR Capital Markets, said the decline in new technology stocks offers a chance for large-cap technology companies to acquire them over the next three to six months. Specifically, he suggested that International Business Machine (IBM) acquire Splunk (SPLK), Sap AG (SAP) acquire Tableau Software (DATA) and Microsoft (MSFT) acquire Imperva (IMPV). 

Adami said Imperva may be worth a short on the long side based on its small market cap and takeover potential. 

That was "not a great" earnings report from Fossil (FOSL), according to Finerman. She hoped the poor results were not a tell on other retailers' results. 

Adami called the last four earnings reports from IBM "lousy." He said the growth at the company continues to "wane." 

Nathan questioned CEO Ginni Rometty's comments that IBM is at the "heart of innovation" considering its sluggish revenue growth. He added that the recent slowdown could just be the start of more pain for the company. 

Coca-Cola (KO) upped its stake in Keurig Green Mountain (GMCR) to 16%. Seymour said investors can own KO based on valuation alone. He liked the company's plan to team up with GMCR and make its way into the home beverage market. 

Adami reasoned that another company, such as Pepsico (PEP) or Starbucks (SBUX), could make a similar move as Coca-Cola with SodaStream International (SODA). 

Mike Mayo, bank analyst at CLSA, said the U.S. government is more involved in the affairs of banks than ever before. He said Morgan Stanley (MS) can thrive despite the new government regulations. Morgan Stanley is his top pick -- he has a buy rating on with a $40 price target. He suggested that Bank of New York Mellon (BK) needs to restructure. 

Adami said defense stocks -- such as Lockheed Martin (LMT), Rockwell Collins (COL), Boeing and L-3 Communications Holdings (LLL) -- are not overvalued and have "a long way to go on the upside." 

Wal-Mart (WMT) reports earnings on Thursday morning and was the featured company on the show's "Street Fight" segment. Seymour was the bull, saying the company has been investing in the infrastructure to grow revenues. He added Wal-Mart has a big opportunity in e-commerce and suggested that food inflation is actually goodfor retailers. 

Nathan disagreed, saying the stock is running into resistance near $80 and has downside potential after rallying 8% since its fourth-quarter earnings results. He said the company's e-commerce strategy will be hard to pull off. He thought the stock could decline to the mid-$70 level. 

When asked if she was a buyer or a seller of WMT, Finerman didn't say she was a buyer but disagreed with the idea of shorting the stock. 

Whirlpool (WHR) fell 3% and was the first stock on the show's "Pops & Drops" segment. Adami said the stock "feels sort of toppy." He reasoned that it could decline to the mid-$140s. 

DirecTV (DTV) dropped 1%. Nathan said not to "chase" the stock on its M&A news. 

Weibo (WB) jumped 3%. Seymour said he would stay long. 

Lululemon Athletica (LULU) climbed 1%. Finerman said not to buy the stock based solely on the rumors of a takeover by VF Corp. (VFC). 

Andrew Littlefair, president and CEO of Clean Energy Fuels (CLNE), was a guest on the show. The company decreased its capital expenditure by 63%, causing investors to worry about growth. He said that there are a lot of fleets testing compressed natural gas (CNG) and liquified natural gas (LNG) alternatives. 

He hopes the adoption of natural gas fuel for trucking will be high, as it was by garbage trucks where only 3% used natural gas fuel in 2008. Now, 63% use it. Trucking companies will save roughly $1.50 per gallon in fuel costs, he concluded. 

Seymour called CLNE a "fantastic" long-term story. He admitted that it has been a frustrating stock to own but said he's sticking with it. 

Nathan said the implied earnings move for Cisco Systems CSCO is 4%, based on options activity. He suggested that it could move more than the implied 4% move.  

For their final trades, Finerman was a buyer of H&R Block (HRB) and Nathan was a seller of the PowerShares QQQ Trust ETF (QQQ) via long puts. Seymour was a buyer of BHP Billiton (BHP) and Adami was a buyer Imperva.

-- Written by Bret Kenwell in Petoskey, Mich.

Follow @BretKenwell

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter.

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