There’s Nothing Wrong With Booking Profits in These Retail Stocks

NEW YORK (TheStreet) -- Shares of Target (TGT)  rose 6.6% on Wednesday after surprising analysts with a top- and bottom-line earnings beat. The quarter was great, but it's time to take profits for now, said Pete Najarian, co-founder of optionmonster.com and trademonster.com.

"I don't think there's anything wrong with the company," he added on CNBC's "Fast Money Halftime" show. The stock has simply moved too far to fast. He also took profits in Lowe's (LOW)  for similar reasons. 

Investors don't need to sell Target, said Josh Brown, CEO and co-founder of Ritholtz Wealth Management. He didn't recommend investors start a new position near current levels but those who have been long can stay long. 

Companies likes Target and Wal-Mart (WMT) can rally longer than many investors expect because the stocks have underperformed so badly for much of the past two years. These two companies will also benefit greatly from lower gas prices, Brown reasoned. 

"Target reported a great quarter, but what catalyst exists to push the stock even higher from here?" asked Mike Murphy, founder of Rosecliff Capital. He advocated taking profits near current levels.  

It's never a bad idea to lock in profits when they exist, according to Jon Najarian, co-founder of optionmonster.com and trademonster.com. He likes Wal-Mart on the long side and says the stock is under-owned by institutions. For that reason the stock can continue to move higher. 

Brian Cornell, CEO and chairman of Target, was a guest on the show. Customer satisfaction is the company's top goal, he said. Target needs to have the right product in the store, specifically in these four categories: baby, home, kids and style. Management is not satisfied with the company's Canadian operations, something that remains a focus going forward.

Customers can experience Target in several different ways, including online, in-store and in-store product pickup. The company's omni-channel distribution is paying off as well, up 30% year over year, he said. Regarding the recent data breach, it's an issue that plagues the entire industry and is something management monitors every day. "We have upped our game" in cyber security, he concluded.

On Keurig Green Mountain (GMCR) , Brown said investors should stay long the stock. The price action has been great, Coca-Cola (KO) owns a 16% stake and is likely to buy more of the company, and earnings results continue to impress the Street. 

Murphy disagreed, arguing that at 40 times earnings the stock seems too expensive. Shares are being "priced to perfection" ahead of earnings and a disappointment could push shares significantly lower. 

Also catching the traders' interest is Halliburton (HAL) , which is down 12% after announcing its plans to acquire Baker Hughes (BHI) for $34.6 billion. That drop makes shares of HAL attractive, Murphy said. Lower oil prices aren't hurting operations, and the acquisition will create $2 billion in cost savings. Halliburton is a buy. 

Brown says investors can buy Petrobras (PBR) . The stock looks good on the long side now that all of the bad news seems to be out of the way. 

Lower oil prices help the airlines. Even though JetBlue Airways (JBLU) is tacking on baggage fees for customers, Pete Najarian said he still likes Delta Air Lines (DAL) , American Airlines (AAL) and United Continental (UAL) as his top airline plays. 

Tony Dwyer, chief equity strategist at Canaccord Genuity, called his 2014 year-end target of 2,230 on the S&P 500 a little "too optimistic," but suggested that it could reach that level as soon as "early January." He has a 2015 year-end target of 2,337. 

For their final trades, Brown said investors can stay long Target and Jon Najarian is buying Marathon Oil (MRO) . Murphy is a buyer of Halliburton and Pete Najarian likes Coca-Cola on the long side.

-- Written by Bret Kenwell

Follow @BretKenwell

More from Jim Cramer

Regions Financial, Edwards Lifesciences: 'Mad Money' Lightning Round

Regions Financial, Edwards Lifesciences: 'Mad Money' Lightning Round

First Horizon National: Cramer's Top Takeaways

First Horizon National: Cramer's Top Takeaways

Waste Management: Cramer's Top Takeaways

Waste Management: Cramer's Top Takeaways

Jim Cramer: Will Apple or Amazon Become the World's First Trillion Dollar Stock?

Jim Cramer: Will Apple or Amazon Become the World's First Trillion Dollar Stock?

Not Thankful for Fridays: Cramer's 'Mad Money' Recap (Friday 4/20/18)

Not Thankful for Fridays: Cramer's 'Mad Money' Recap (Friday 4/20/18)