'Fast Money' Recap: Building on a Housing Recovery

NEW YORK (TheStreet) -- U.S. equities rallied once again on Tuesday, with the S&P 500 climbing 0.50%. 

On CNBC's "Fast Money" TV show, the trading panel took a look at the housing recovery. 

Brian Kelly, founder of Brian Kelly Capital, said the housing market does appear to be recovering following its "spring slump" earlier in the year. If housing and the economy continue to improve in the second half of 2014, then bonds seem to be mis-priced. 

Tim Seymour, managing partner of Triogem Asset Management, said the housing market is not near its peak and that bodes well for companies like Home Depot (HD) and Lowe's (LOW) . Easing credit standards should also give a boost to the housing market. 

Guy Adami, managing director of stockmonster.com, called Home Depot a better company than Lowe's. Home Depot is a buy on a pullback. 

Dan Nathan, co-founder and editor of riskreversal.com, told investors to buy individual companies tied to the housing market, not the SPDR Homebuilders ETF (XHB) , which has many retail-based components in the fund.

William Power, research analyst at R.W. Baird has an outperform rating on Apple (AAPL) and a $105 price target on the stock. He said he has no immediate plans to boost his price target, but it's good to see the stock with upward momentum. He suggested that the new iPhone should break its previous opening weekend record of nine million handsets, while December should be another strong quarter, with possibly 60 million units sold. 

Kelly, who is short Apple, reiterated that his stop-loss is at $101. While investors continue to push the stock higher, he argues that all of the known positive news seems priced into the stock. 

Nathan said that "expectations are getting very, very high," for Apple as the stock continues its upward movement. Investors buying the stock now must be pretty confident in new products and services from Apple. 

Seymour suggested that while Apple has had a big move to the upside, the stock still trades with a reasonable valuation. 

The traders provided their top "breakout stocks." Seymour is a buyer of the MSCI Emerging Markets ETF (EEM) and Nathan is a buyer of Nike (NKE) . Kelly is a buyer of gold and/or the Market Vectors Gold Miners ETF (GDX) while Adami is a buyer of EXACT Sciences (EXAS) . 

Nathan said Sprint's (S) new pricing plan is bad for investors over the short term but is good for consumers. He reminded investors that T-Mobile USA (TMUS) had a similar strategy in the past and now is considered a takeover target for many companies. 

Adami said Microsoft (MSFT) seems poised to move toward $50, after failing to pullback as much as he previously thought. Kelly said Microsoft pays a nice dividend and is a good stock to buy on a pullback.

Seymour likes the retail sector, and said many stocks likes Urban Outfitters (URBN) , J.C. Penney (JCP) and Target (TGT) are reporting better-than-expected results and are trading more bullishly. 

Adami said investors should stick with high quality stocks from the retail sector. He likes Macy's (M) and Michael Kors (KORS) . 

Nathan said he likes Dick's Sporting Goods (DKS) .

Adami said investors can buy shares of La-Z-Boy (LZB) if the stock finds support near $22 or $21.50. 

Seymour said investors should buy Chinese equities, as fears over macro and credit issues are overblown. He suggested using the iShares China Large-Cap ETF (FXI) and/or buying individual stocks such as China Mobile Limited (CHL) , Baidu (BIDU) and PetroChina Company (PTR) . 

Kelly said he is playing Chinese equities via the iShares MSCI Hong Kong ETF (EWH) . 

Tony Wible, managing director at Janney Capital Markets, suggested that Time Warner (TWX) spin its HBO asset into a "tracking stock," which will unlock value for shareholders. With an EBITDA multiple of 15 times, or with a similar subscriber valuation to Netflix (NFLX) , the HBO tracking stock would be worth roughly $35.

Using a value of $60 per share for the rest of Time Warner's businesses quickly gets the share price to $90, he argued. Wible has a buy rating on shares of Time Warner with an $87 price target. 

Kelly said he is "not a fan" of tracking stocks. Seymour agreed with Kelly, but called Time Warner a buy and Netflix a sell. Nathan is a not a buyer of Netflix, and Adami is a buyer of Time Warner, which seems likely to trade back toward $85.

Yingli Green Energy (YGE) climbed 6% and was the first stock on the show's "Pops & Drops" segment. Adami said between Yingli and Trina Solar (TSL) , he is a buyer of Trina. 

El Pollo Loco (LOCO) fell 10%. Kelly said he is a buyer if the stock finds support near $28. 

Rackspace Hosting (RAX) popped 3%. Nathan said with the company's desire to be bought out, its large share repurchase plan and multiple activist investors, something seems bound to push the stock higher. Use a tight stop-loss, though, he cautioned.

BHP Billiton (BHP) dropped 4%. Seymour said the stock fell because it did not announce what investors had been expecting: a buyback plan. However, he is a buyer of global integrated miners.

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said Google (GOOGL) has become the third-largest company in the S&P 500 and is closing in on becoming the second largest. The company needs to continue being innovative and competitive while protecting its "turf" on what it's already created. 

Seymour is long shares of Google because it continues to grow revenue, has impressive innovation and an attractive valuation. Kelly likes the stock near current levels. 

Due to its earnings release, Nathan said investors have $40 as potential upside and $30 as potential downside in shares of Hewlett-Packard (HPQ) . Options pricing is relatively cheap for those that want to hedge their position or use them to take an outright directional position, he added. 

Kelly said there was a "mini flash crash" in the bitcoin market on Tuesday. Volatility may make it hard for some investors to stay in the name. 

For their final trades, Kelly is a buyer of Freeport-McMoRan (FCX) and Nathan is buying Sprint. Adami said to buy McDonald's (MCD) and Seymour is a buyer of iShares MSCI All Peru Capped ETF (EPU) .

-- 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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