Fast Money
Posted on February 04, 2008 at 22:41 PM EST
Word On The Street Stocks weren’t the flavor for investors Monday as recession fears continue to worry the markets. The Dow lost 108 points and the Nasdaq fell 30 points. Jeff Macke explained that investors didn’t have many reasons to buy stocks Monday. Pete Najarian says this market is still a trader’s market. Karen Finerman says that credit issues are still a problem and she is staying short Capitol One Financial Corporation ( COF ). Tim Seymour says emerging markets have better valuations and investors are flocking to the overseas trade. Credit problems and concerns with subprime continue to hurt the financial stocks. Finerman mentioned that Wachovia Corporation ( WB ) and Wells Fargo & Company ( WFC ) traded lower Monday off a Merrill Lynch downgrade. Also, American Express Company ( AXP ) , Capitol One, and Discover Financial Services ( DFS ) traded down on a UBS downgrade. Najarian pointed out that MasterCard Incorporated ( MA ) was strong in the tough environment for financials. Google Inc. ( NASDAQ: GOOG ) accused Microsoft Corporation ( MSFT ) of trying to take control of the internet with their $44.6 billion bid for Yahoo ( YHOO ). Macke says Google is complaining and the price action in their stock is weak. Najarian says a good earnings report from Cisco Systems Inc. ( CSCO ) could help the technology sector. He also likes Apple Inc. ( NASDAQ: AAPL ) and he would avoid Google for a few more weeks. Seymour says he loves Intel Corporation ( INTC ) here. Boston Scientific Corporation ( BSX ) reported a fourth-quarter net loss of $458 million due to hefty losses on charges. Najarian mentioned that Medtronic Inc. ( MDT ) drug coated stents will hurt BSX. Las Vegas Sands Corp. ( LVS ) reported fourth-quarter profits that plunged 65% due to expansion costs. Finerman says the recession is hitting travelers and she is short Morgans Hotel Group Co. ( MHGC ). Macke mentioned that Dollar Thrifty Automotive Group Inc. ( DTG ) fell 37% Monday after the rental car firm cut its 2007 earnings guidance. Legendary real estate investor Sam Zell announced an 8% stake in Starwood Hotels & Resorts Worldwide Inc. ( HOT ). Najarian reminded viewers that Zell sold the real estate sector at the top, so you might want to pay attention to him buying HOT here. Big pharma stocks like Merck & Co. Inc. ( MRK ) and Eli Lilly and Company ( LLY ) were strong in a weak tape. Najarian says MRK has been oversold and this could be the time to buy. He also likes Sanofi-Aventis ( SNY ). Earnings Trade News Corporation ( NWS ), The Walt Disney Company ( DIS ) and Time Warner Inc. ( TWX ) are set to report earnings this week. What is the trade? Macke explained he likes Disney because they always anticipate slower growth in the economy. He loves what CEO Bog Iger is doing by integrating the theme parks with the movie division. Seymour says he likes Disney for their ESPN brand that caters to adults. Commodity Trade BHP Billiton Limited ( BHP ) is set to report earnings on Wednesday. What is the trade? Seymour says that Alcoa Inc. ( AA ) and China’s Chalco don’t want to see BHP buyout Rio Tinto plc . ( RTP ) He explained that this opposition to the takeover will help to raise the price for a potential bid for RIO and consolidation will remain a theme for the entire sector. Seymour says United States Steel Corporation ( X ) and Nucor Corporation ( NUE ) are in play. He also likes Market Vectors-Coal ETF ( KOL ) for a way to play the coal sector. Finerman disclosed she is long Rio Tinto. Najarian says keep an eye on Joy Global Inc. ( JOYG ), Arch Coal Inc. ( ACI ) and Alpha Natural Resources Inc. ( ANR ) . Retail Trade Retail stocks have been en fuego over the past couple of weeks, but some best of breed names like Wal-Mart Stores Inc. ( WMT ) and Target Corporation ( TGT ) took a hit Monday. With January sales figures due out Thursday is it time to take profits in the space? Finerman explained that when a sector moves that sharply to the upside investors must take some off the table. She would like to see the sector pull back more before she reloads. Macke says the retail stocks will be great trading vehicles for the entire year. He recommends investors make a list of retail names they like and wait for them to come down. Seymour likes Sears Holdings Corporation ( SHLD ) from a valuation perspective and Macke says he would buy SHLD at a 9-handle. Finerman says she doesn’t have a long SHLD position, but she wouldn’t short it. Egypt Trade With 80 million strong Egypt is the highest populated nation in the Middle East. The home of the pyramids and pharaohs is starting to see the flow of petrodollars into their economy. Egypt’s economy is now growing at 7% annually and receiving a shot in the arm from growth in tourism. Last year 10 million foreigners flocked to see one of the Seven Wonders of the World. What is the trade? Seymour says the trade is S&P Emerging Middle East & Africa SPDR ( GAF ) or T.Rowe Price Tramx Mutual Fund ( TRAMX ) . Clorox CEO Interview The Clorox Company ( CLX ) CEO Don Knauss joined the “Fast Money” crew to discuss his companies prospects. Knauss explained that he issued more cautious guidance Monday because the pressures of commodity costs are rising from $25 million to $100 million for the second half of the year. He says their glad trash bags have the largest exposure to commodities costs of all their major brands. Knauss says Clorox is growing their top line ahead of Wall Street expectations, growing volume and running more efficient cost saving programs. Seymour disclosed he bought Unilever N.V. ( UN ) on Monday because they have big exposure to Eastern Europe. Finerman says she owns Wal-Mart which is her way to get exposure to firms like Clorox. Trader Radar Dollar Thrifty Automotive Group Inc. ( DGT ) traded ten times its average daily volume Monday. POPS&DROPS POPS Palm Inc. ( PALM ) traded up 5%. Seymour wondered if anyone even owns a Palm Pilot. RealNetworks Inc. ( RNWK ) traded up 4%. Najarian says RNWK has some problems. China Life Insurance Company Limited ( LFC ) traded up 5%. Seymour doesn’t like that LFC trades at 45 times earnings. Solarfun Power Holdings Co. Ltd. ( SOLF ) traded up 8%. Finerman says don’t get involved in SOLF. DROPS UAL Corporation ( UAUA ) fell 6%. Macke explained that UAUA announced they would charge consumers $25 to check a second bag. Pier 1 Imports Inc. ( PIR ) fell 8%. Macke says PIR is the slowest turn around in history. WCI Communities Inc. ( WCI ) fell 10%. Finerman explained the drop is misleading because the stock only fell 50 cents. Under Armour Inc. ( UA ) fell 6%. Najarian says UA paid up for their Super Bowl advertisement and it didn’t work. Virgin Mobile USA Inc. ( VM ) fell 12%. Seymour says that VM story is losing ground to AT&T Inc. ( T ) and Verizon Communications Inc. ( VZ ) . Delta Air Lines Inc. ( DAL ) fell 7%. Macke says Monday was a tough day for the airlines. Humana Inc. ( HUM ) fell 3%. Najarian explained that HUM is putting out too much negativity in a stock market that is unforgiving. Final Trade Najarian picked Albemarle Corporation ( ALB ) . Macke likes Walt Disney ahead of earnings and for a long term investment. Seymour favors Gold Fields Limited ( GFI ). Finerman recommends Kaiser Aluminum Corporation in front of earnings ( KALU ).