Word On The Street
The stock market mustered up a rebound after a two-day selling spree on Tuesday. The Dow finished up 65 points and the Nasdaq finished up 21 points. Pete Najarian explained that energy and technology stocks lead the market higher Tuesday. Jeff Macke liked the price action in the stocks Tuesday and he feels the market could be making a bottom. Goldman Sachs Group Inc. (GS) reported a rise in fourth-quarter profits, but the stock fell 3%. Finerman wasn’t happy that Goldman had a big one time gain, but she is still long the stock. She thinks the valuation is attractive at these levels. Najarian loved the earnings numbers and he jumped on the options at $200. Adami explained that it doesn’t matter if he thinks Goldman’s stock is cheap, but the investment bank’s own stock buyback shows they think it’s cheap. Fifth Third Bancorp (FITB) said that it will take a $275 million provision for loan losses which is $135 million more than in the third quarter. Finerman says that Fifth Third is the stupidest bank name of all time. Najarian says follow the best in breed like Warren Buffett who has positions in Wells Fargo & Company (WFC) and U.S. Bancorp (USB). Best Buy Co. Inc. (BBY) reported a 52% rise in profits, but disappoints on their fourth-quarter earnings forecast. Macke says this was a great quarter and he still thinks BBY is best of breed. TD Ameritrade Holding Corporation (AMTD) raises their first-quarter earnings forecast. Najarian says there is nobody better then Ameritrade CEO Joe Moglia. Adami thinks the stock could be getting a bit extended and he wouldn’t go diving into it at these levels. Darden Restaurants Inc. (DRI) reported a 30% drop in second-quarter net earnings on acquisition costs. Macke continues to say avoid buying casual dining stocks. Palm Inc. (PALM) shares fall after the handheld device maker swings to a loss in the second-quarter. Macke thinks Palm can turn it around, but he wouldn’t touch the stock. Najarian says PALM is getting killed by Research In Motion Limited (RIMM) and he would avoid the stock. Apple Inc. (AAPL) announced they’re in talks to sell the iPhone in Japan through NTT DoCoMo. Najarian says the stock pulled back because they don’t have a deal yet. He mentioned the stock is getting cheap and he is looking to buy it. Joy Global Inc. (JOYG) is set to report earnings on Wednesday. Adami thinks the expectations are low and the stock could be a good trade into earnings. Eli Lilly and Company (LLY) Chief Operating Officer John Lechleiter will succeed Sidney Taurel as Lilly’s new CEO. Najarian thinks moving forward Lilly looks great and he likes their franchise of drugs. Adami says LLY is a volatile stock but it could be in a good place. December U.S. equity fund outflows are on pace to be at the highest level since July 2002. Macke says this number only matters when it is at extreme levels and this is an extreme level. He explained this is a contrarian play and in theory it could be bullish for stocks.
Oil Trade
Tradition Energy Director of Market Research, Addison Armstrong, joined the “Fast Money” crew to discuss his take on oil. Armstrong thinks the US economy is slowing down and that will drag the entire world economies with it. He feels that oil will first trade to $100 and that will cause a blow off top before it eventually trades back to $70. Najarian agrees with Armstrong and he feels $100 will be the trigger to sell oil. Dylan Ratigan mentioned that the UltraShort Oil & Gas Proshares (DUG) is a way to play oil from the short side.
Oracle Earnings Trade
Oracle Corporation (ORCL) is set to report earnings after the close Wednesday. What is the trade? CNBC Silicon Valley Bureau Chief Jim Goldman joined the “Fast Money” crew to discuss his take on Oracle. Goldman says that everyone he is talking to is looking for a beat and raise kind of quarter out of Oracle. He mentioned that channel checks are indicating that business is even strong from financial service clients. Goldman explained that if things are good at Oracle then that will bode well for Cisco Systems Inc. (CSCO), Intel Corporation (INTC), Dell Inc. (DELL) and Hewlett-Packard Company (HPQ). Najarian mentioned that options traders are buying the $22.50 calls for every month which suggest to him that stock will move higher. Goldman reminded investors that the key for Oracle going forward will be the firm’s guidance.
Nike Earnings Trade
NIKE Inc. (NKE) is set to report earnings after the close on Wednesday. What is the trade? Macke thinks as a trade he would sell the stock. He says Nike will beat earnings, but he thinks the street will sell the news. However, as an investment Macke thinks Nike is a good hold into the 2008 Olympics. Najarian recommends that investors look to buy Nike on any pullbacks and Adami agreed.
Happy 52-Week High Tribune Company (TRB)
POPS&DROPS
POPS- DreamWorks Animation SKG (DWA) traded up 9% after the firm announced a $150 million buyback. Macke says DWA isn’t going anywhere. Novellus Systems Inc. (NVLS) traded up 3% on unusual options activity. Najarian explained there was some unbelievable options activity in NVLS and something must be going on. Sotheby’s (BID) traded up 8%. The Magna Carta is set to go on sale Tuesday night and it’s expected to bring in $30 million. Adami thinks $30 million is cheap. Cadbury Schweppes plc (CSG) traded up 2% after Nelson Peltz’s Trian Fund confirmed a 4.5% stake in the confectionery firm. Finerman explained that CSG popped because Peltz issued an activist letter. Clearwire Corporation traded up 9% on no news. Najarian speculated that Google Inc. (NASDAQ: GOOG) might make a bid for CLWR. Adobe Systems Incorporated (ADBE) traded up 2% after the software maker reported a 34% rise in sales. Macke thinks Adobe is a good long term buy. Spectrum Brands Inc. (SPC) traded up 1% after the company signed a deal to sell batteries at Disney theme parks. Adami explained that if SPC can’t rally more then a nickel with news like that it doesn’t bode well for the firm. Biogen Idec Inc. (BIIB) traded up 1% rebounding from the slaughter the stock saw last week. Finerman wasn’t impressed. Visicu Inc. (EICU) exploded up 32% after Phillips Electronics bought the firm for $430 million. Najarian says this shows that American companies are on sale. Waste Industries USA Inc. (WWIN) traded up 21% after the company announced plans to go private for $544 million. Macke says deals are picking up.
DROPS- Garmin Ltd. (GRMN) fell 7% after NPD showed that the GPS maker lost market share in November. Finerman thinks GRMN makes a great product, but she can’t get on board with the valuation here. She thinks the stock is going lower.
Face2Face
Al from New York writes, “What do you think the future of E*TRADE Financial Corporation (ETFC) is in light of TD Ameritrade Holding Corporation (AMTD) guiding higher?” Najarian thinks that ETFC is a potential takeover target for Ameritrade. He also disclosed that he is currently long the stock. Frances from North Carolina writes, “How can Jeff Macke say casual dining is dead when Chipotle Mexican Grill Inc. (CMG) jumped 7% Tuesday?” Macke explained that there are too many short sellers in the casual dining stocks and that warrants caution on the sector.
Final Trade
Macke likes Best Buy Co. Inc. (BBY). Adami recommends Oracle Corporation (ORCL). Najarian favors Cypress Semiconductor Corporation (CY).