'Fast Money' Recap: Markets Start Another Week on Positive Note

NEW YORK (TheStreet) -- The Dow Jones Industrial Average and S&P 500 both closed at record highs on Monday, starting the week off on a positive note. 

Shares of Apple (AAPL) closed higher by 1.6% on its first day of trading following its 7:1 stock split. 

Pete Najarian, co-founder of optionmonster.com and trademonster.com, acknowledged Apple's stock price usually rallies into product launches. However, the company isn't expected to launch any new products until September, meaning the stock could encounter weakness in July and August. 

Tim Seymour, managing partner of Triogem Asset Management, argued Apple doesn't trade with an expensive valuation, and that's one of the key reasons why the stock continues to move higher as investors continue to buy shares. 

Steve Grasso, director of institutional sales at Stuart Frankel, called Apple one of the "cult stocks" for retail investors. He added that the stock seems unlikely to pullback to roughly $85. 

Colin Gillis, director of research and senior tech analyst at BCG Financial, was a guest on the show. Shares of Apple tends to back off following its presentation at the WWDC event, but did not this year. He suggested that perhaps the company is supporting the stock price with some of its $90 billion share buyback program.

Gillis said his main concern with Apple is that it is still very dependent on hardware, not software, and is still weak in its services business. He added the company's June quarter is historically the weakest earnings report, which could set up investors for disappointment. The stock isn't very expensive in valuation, he admitted, and Apple should have bought Spotify, which has 10 million paying subscribers, instead of Beats Electronics

Facebook (FB) is hiring PayPal's President David Marcus, who will become the former's chief of messaging. Guy Adami, managing director of stockmonster.com, said shares of Facebook should trade for $75 and "go higher" from current levels. 

Seymour pointed out that shares of eBay (EBAY), the owner of PayPal, has found support near $49. Using a sum-of-the-parts valuation, the stock is worth $60, he argued. 

Najarian said shares of eBay should continue to find support near $49. He praised Facebook CEO Mark Zuckerberg for remaining proactive by bringing in new talent and making acquisitions. 

Time Inc. (TIME) traded publicly on Monday after it was spun off from Time Warner (TWX). However, Adami was a buyer of Time Warner and not Time, saying TWX looks likely to "blow through" current resistance near $70. 

Idenix Pharmaceuticals (IDIX) surged 229% after it was announced Merck (MRK) would acquire the company for $3.85 billion. CNBC's Meg Tirrell was a guest on the show. She said there is clearly demand for companies that have a successful hepatitis C drug, and therefore she was searching out possible takeover candidates that had a treatment.

Among the ones she found are Achillion Pharmaceuticals (ACHN), Enanta (ENTA), Vertex Pharmaceuticals (VRTX) and Gilead Sciences (GILD), the latter of which has a $121 billion valuation. Only a handful of companies could pull of an acquisition of that size, such as Johnson & Johnson (JNJ) and Roche. 

Najarian said it makes sense for large pharmaceutical companies to buy biotech companies for the drug pipelines rather than merge with other large-cap pharmaceutical companies hoping to create synergies and cut costs. 

Scott Stringer, New York City's comptroller, is a supporter of separating the role of CEO and chairman from Netflix's (NFLX), which means Reed Hastings would no longer be chairman. The CEO "can't answer to himself," Stringer said, and a stronger, independent board of directors is better for the company in the long term. It has nothing to do with Hastings personally, he added. 

Najarian agreed the roles should be separate. In regards to Netflix, Grasso questioned whether such a maneuver would slow the company's growth. Adami said investors should trim their long positions in Netflix and book profits as it nears its previous high of $450 per share. 

Najarian pointed out the bullish options activity, specifically in shares of TRI Point Homes (TPH). He added that the stock has a big short-interest. 

Grasso said shares of KB Home (KBH) should "see a lot more upside." 

Seymour said Tesla Motors' (TSLA) Gigafactory could wind up being a huge "black hole" for the company's capital expenditures and R&D spending. Grasso suggested that investors wait for shares of Tesla to hold the $207 level before getting long. 

Adami said Telsa is in "no man's land" near $205 as it continues to "meander" around current levels. He is not a buyer or a seller.

Family Dollar Stores (FDO) climbed 14% and was the first stock on the show's "Pops & Drops" segment. Najarian called the stock "too hot to touch" at current levels, meaning he is not a buyer or a seller. 

Tyson Foods (TSN) fell 6%. Seymour said he is not a buyer. 

Hittite Microwave (HITT) popped 29%. Adami said investors can stay long Analog Devices (ADI), which is taking over HITT for $2 billion. 

International Game Technology (IGT) jumped 14%. Grasso said there's "probably a little more room to the upside." 

Paul Hickey, co-founder of Bespoke Investment, said that corporate earnings per share have been growing much faster than sales, most notably so in the past four quarters. Three sectors have been the exception: health care, telecom and materials. He added share buyback programs have been key to driving EPS growth, but he has three stocks that have demonstrated strong revenue growth too: Applied Materials (AMAT), Amphenol (APH) and Under Armour (UA). 

Adami said Humana (HUM) has demonstrated strong revenue growth of roughly 10% while the stock is not very expensive in valuation. 

Grasso said Amazon (AMZN) grew revenue 23% last quarter compared to year-ago figures. "I think the stock still performs well," he added. 

Najarian liked Hickey's Under Armour pick and added Aetna (AET) has had strong growth. Despite shares of AET trading at 52-week highs, Najarian thinks "it goes a lot higher." 

Seymour liked Monsanto (MON) and LyondellBasell Industries (LYB). Despite both stocks moving higher lately, he said investors "can stay long."

Spanish and Irish 10-year bond yields have dropped below that of the U.S. 10-year Treasury yield, making it more expensive for the U.S. to borrow money than either of the two European countries. 

Dennis Gartman, editor and publisher of The Gartman Letter, called this move in bond yields total "lunacy." He added that eventually "common sense" will kick in and the trade will reverse, but he is unsure of how long that will take. When European yields do inevitably move higher it should put downside pressure on the euro, which he is a seller of. The U.S. economy is doing much better than the European economy, he concluded. 

Seymour agreed with Gartman's assessment, and suggested the yields are beneficial to emerging markets. It shows that capital is flowing back into Europe, he added. 

For their final trades, Grasso is buying KBH and Adami is a buyer of Abercrombie & Fitch (ANF). Najarian is a buyer of CSX Corp. (CSX) and Seymour said to buy the ProShares UltraShort 20+ Year Treasury ETF (TBT). 


-- 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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