'Fast Money' Recap: What Should You Buy in July?

NEW YORK (TheStreet) -- The S&P 500 fell ever so slightly on Monday, closing lower by 0.04%. 

On CNBC's "Fast Money" TV show, the trading panel revealed their top trades for the second half of 2014. 

For his second-half trade, Guy Adami, managing director of stockmonster.com, said interest rates are headed lower. He said the 10-year Treasury yield will decline towards 2% and the iShares 20+ Year Treasury Bond ETF (TLT) is headed "north of" $120.

Dan Nathan, co-founder and editor of riskreversal.com, said bond yields will not go that low if the global and U.S. economy continue to do moderately well. 

Karen Finerman, president of Metropolitan Capital Advisors, was unsure and said interest rates could go up or down at this point. 

Steve Grasso, director of institutional sales at Stuart Frankel, said the weak first-quarter GDP results were more than just weather related. He added equities are in for a bigger correction than many investors seem to think. For his second-half trade, Grasso is buying Southern Company (SO) and utility stocks. 

For Finerman's second-half trade, she is a buyer of energy stocks, which can continue to go higher despite the recent run. Specifically, she likes Dorian LPG (LPG). 

Adami suggested that M&A activity in the energy sector is likely to accelerate in the second half of 2014. 

Grasso called the energy sector "frothy" at current levels, adding that if the Iraq situation calms down then WTI crude oil is likely headed lower. If that happens, a lot of energy stocks will get sold off as a result. 

For Nathan's second-half trade, he said the high-flying stocks that were brutally sold off in the spring are likely to be sold off again. These stocks will make new lows on the year he reasoned, and was most pessimistic on cloud stocks. 

Adami said shares of Zillow (Z) seem likely to continue outperforming Move (MOVE). 

General Motors (GM) announced another recall, this one for 7.6 million vehicles. Finerman said the company may have quality control issues but has had excellent "crisis control" so far. She added that the stock continues to trade well despite the negative headlines. 

Adami agreed with Finerman, saying that between Ford (F) and GM, he would buy GM. He also likes BorgWarner (BWA) and Delphi Automotive (DLPH) on the long side. Grasso is a buyer of Ford.

Yahoo! (YHOO) jumped 2.5% following an analyst upgrade based on Alibaba's valuation. Yahoo! has a 22.6% stake in the Chinese Internet company. Nathan said investors are discounting shares of Yahoo! because they are unsure of what CEO Marissa Mayer will do with the proceeds from the Alibaba IPO, and they are also pessimistic on Yahoo!'s core business. He is a buyer near $30, not $35. 

Adami said Yahoo! should appreciate by $6 to $7 per share based on its stake in Alibaba. 

D.R. Horton (DHI) is "very exposed to the first-time homebuyer," Grasso said. The stock has a lot of room to the upside. He is long KB Home (KBH). 

Dennis Gartman, editor and publisher of The Gartman Letter, was a guest on the show. He said the corn and soybean crop this year is "huge" while the wheat crop is also relatively large. This drives prices down, making input costs lower for companies like Kellogg (K) and General Mills (GIS), he reasoned. 

Adami said shares of GIS are still not cheap based on valuation, despite the recent selloff. He added that Archer Daniels Midland (ADM) needs to break through $46 on the upside or it could risk forming a "double top," a bearish technical formation. 

Grasso is a buyer on Monsanto (MON). 

Alexandra Lebenthal, president and CEO of Lebenthal & Company, suggested that Puerto Rican debt, 66% of which is held by U.S. mutual funds, could be at risk of default. The bonds are currently trading at 40 cents on the dollar but a restructuring of the debt could reprice the bonds at just 10 cents on the dollar. She suggested investors avoid this investment. 

GoPro (GPRO) jumped 14% and was the first stock on the show's "Pops & Drops" segment. Adami said traders should buy the stock because it has upside momentum. 

Micron  (MU) climbed 5%. Grasso suggested that investors take some profits near current levels despite the positive catalysts currently driving the stock higher. 

Allergan (AGN) fell 3%. Finerman said a deal between Allergan and Vertex Pharmaceuticals (VRTX) appears likely to happen. 

John Krafcik, president of TrueCar (TRUE), was a guest on the show. About General Motors' large recall, he suggested that in a few weeks all this negative news should be behind the company. Consumers have proved that they don't care. Transaction prices are still incredibly strong and incentive spending is down year over year, he said. TrueCar could be beneficial to used car dealerships, not just new car dealerships, he concluded.  

Adami said shares of TrueCar might run up to $17 but he would rather avoid it at current levels. 

Nathan pointed out the bullish options activity in shares of Cisco Systems (CSCO) after someone bought 50,000 September $27 call options for 20 cents per contract. 

CNBC's John Jannarone and John Kapon, the CEO of Acker Merrall & Condit, were guests on the show discussing the wine market. The wine market has been doing incredibly well, with the exception of Bordeaux wine produced in France, which represented 50% of auction wine sales in 2012.

However, that figure fell to 40% in 2013 and is only 30% of auction sales so far in 2014, Kapon said. Jannarone said hedge funds have been investing in fine wines, with over $500 million in investments going toward the industry since 2011.

-- 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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