'Fast Money' Recap: Stick With U.S. Stocks

NEW YORK (TheStreet) -- U.S. equities finished slightly lower on Tuesday, with the S&P 500 declining 0.16%.

On CNBC’s “Fast Money” TV show, Brian Kelly, founder of Brian Kelly Capital, said U.S. equities remain a quality investment for investors, especially with poor sentiment in European stock markets and low bond yields. He also likes Asian equities. 

Tim Seymour, managing partner of Triogem Asset Management, said emerging markets are also attractive. He suggested that the U.S. dollar is likely to trade slightly higher, but remain mostly rangebound. 

Karen Finerman, president of Metropolitan Capital Advisors, said that investors who believe the U.S. dollar is going to strengthen, should simply buy the PowerShares DB USD Bull ETF (UUP). 

Dan Nathan, co-founder and editor of riskreversal.com, said U.S. equities remain a great investment, while German equities are looking attractive after the large decline. 

Seymour said companies like Toyota Motors (TM) do extremely well when the U.S. dollar is strong. 

When considering a strengthening dollar, Nathan said AT&T (T) is attractive because all of its sales come from the U.S. and it also has an attractive dividend yield exceeding 5%. 

Seymour said he does not like King Digital Entertainment (KING), which reported disappointing earnings results. He suggested there is a low barrier to entry for other competitors. Nathan agreed, wanting nothing to do with the stock either. 

Kelly said Twitter (TWTR) has better investor sentiment and could improve sales if it would raise the pricing of its ads, which are roughly half the price that Facebook (FB) charges. However, he reasoned the stock doesn’t seem to have much upside or downside in the near future. 

Seymour agreed that investor sentiment has improved for Twitter, but suggested investors wait until next quarter to see if the growth continues to be strong. 

Finerman said she doesn’t find the social media industry attractively priced and she is avoiding it. 

Nathan called Twitter’s platform both unique and useful. The company is in the “very early innings of this story.”

Kate Spade (KATE) beat on top- and bottom-line earnings estimates but fell 25% on concerns over margins. Corinna Freedman, an analyst at Wedbush Securities, has a buy rating on Kate Spade with a $40 price target. 

She said the massive decline is “absolutely a buying opportunity. We think the move today was a complete overreaction.” The company delivered incredibly strong revenue and comparable-store sales growth. The company still has sales momentum and she continues to like the stock.  

Finerman said the move to the downside appears overdone in shares of KATE. If it has another bad day on Wednesday she is a buyer. 

Seymour likes shares of Polo Ralph Lauren (RL) because the global luxury retail market remains strong. 

If Pandora (P) fails to breakout of its current downtrend, then it could pullback to $22, Nathan said.

Tony Sacconaghi, senior research analyst at Sanford Bernstein, said the low-end smartphone market continues to rapidly grow, while the high-end smartphone market is stagnating. He suggested Apple (AAPL) is likely to lose market share, albeit slightly, while Samsung (SSNLF) will likely to face pricing pressure and falling margins. Apple is unlikely to have similar pricing pressure, because it has a very strong ecosystem, he reasoned. 

Kelly is short Apple because all of the positive catalysts seem priced into the stock. Seymour is long Apple, reasoning that the company continues to grow market share in other countries, such as India.

Morgan Downey, a commodities trader and CEO of Money.net, said WTI crude oil could be headed to the low-$80s by the end of 2014. Since the commodity has failed to trade higher during heightened geopolitical tension, it is likely to trade lower when that tension dissipates. The spread between WTI crude oil and Brent crude oil is likely to narrow over the next one to two years, he concluded. 

Seymour said he likes refiners such as Chevron (CVX) and Total S.A. (TOT), both of which have attractive dividend yields and can be considered long-term plays. 

Intercept Pharmaceuticals (ICPT) climbed 17% and was the first stock on the show’s “Pops & Drops” segment. Finerman pointed out the stock was higher by over 60% in Monday’s after-hours trading session. She is not a buyer. 

Trina Solar (TSL) fell 5%. Seymour, who is long the stock, said he doesn’t like the company’s recent acquisition and apparently other investors do not either. 

Nuance Communications (NUAN) dropped 9%. Kelly said investors should give the stock a few days to settle down before stepping in to buy. 

Rackspace Hosting (RAX) closed lower by 6%. Nathan said the stock closed below long-term support levels and could head even lower if a buyer does not emerge to acquire the company.

The trading panel was asked which companies seem like potential acquisition targets: 

Seymour said AMC Networks (AMCX) has attractive content, a reasonable valuation and good free-cash flow. 

Nathan said Google (GOOGL), which has roughly $65 billion cash, should consider acquiring Twitter for its real-time search capabilities.

Finerman said Children’s Place Retail Stores (PLCE) seems like an interesting leverage buyout candidate. 

Kelly said Control4 (CTRL) would be an attractive acquisition target for a company like Apple.

Michael Burns, vice chairman of Lions Gate Entertainment (LGF), said the company is unsure how the Expendables 3 was leaked before its scheduled Aug, 15 release date but is looking into the matter. He added that most industries go through waves of M&A every few years, and that digital media companies — like Netflix (NFLX) and Hulu — will continue boosting their content, not just distributing it. 

Seymour said the valuation of Lions Gate Entertainment is “not that exciting,” unlike the company’s story. It’s hard to be negative on the stock, he reasoned, adding the company continues to generate impressive content. 

Nathan pointed out the bullish options activity in Cisco Systems (CSCO), specifically after 10,000 September $27 call options were bought for $0.20. The company, which reports earnings on Wednesday, is near 52-week highs, but has lagged many of its peers. 

For their final trades, Seymour is a buyer of Nokia (NOK) and Nathan is a buyer of Twitter (TWTR). Kelly is a seller of the iShares iBoxx High Yield Corporate Bond ETF (HYG) and Finerman is a buyer of Kate Spade if the stock opens lower on Wednesday. 

-- 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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