Word On The Street
WORD VIDEO HERE
Airline Take
The traders discussed the airline sector which is under increased pressure from high fuel costs. Just this week Continental Airlines (CAL) said it would slash 3,000 jobs, or about 6.5% of its work force, and retire 67 older planes as it looks for ways to save money due to skyrocketing fuel costs. United Airlines (UAUA) made a similar move removing 100 planes and cutting around 1,600 jobs. Macke said its time to stop selling airline stocks and shorting them. He said he would be a buyer of the sector on a dip. He explained that high oil prices is finally forcing the airlines to fix their business models. Finerman said the airline companies will just lose less money and these new initiatives will not make them profitable.
Climate Trade
The traders talked about how good company’s don’t blame the climate for mis-steps. Macke said investors should sell any retail stock that has a management that blames the weather for its problems in a press release. He said good retailers sell umbrellas when it rains. Macke had harsh words for BJ Wholesale (BJ) after the company blamed weak sales numbers on cold weather and increased rainfall. He explained that Wal-Mart (WMT) used to blame high gas prices for weak sales but now the company has seen the light.
Apple iPhone Trade
The traders talked with Ben Reitzes and IT hardware analyst at Lehman Brothers about the upcoming release of Apple’s new iPhone. Reitzes said he wouldn’t be surprised to see the new 3G phone price at between $200 to $300. He explained that AT&T will benefit because end-users will be downloading more data and hog traffic on their networks with the new iPhone. Reitzes said the new phone will have advanced download functions for getting games and software off the Internet. He think Apple is a buy and he is bullish long-term on the stock.
POPS&DROPS
POPS- Home Depot (HD) popped 3% after the company made bullish comments at its analyst day. Finerman disclosed she owns this stock. Anheuser-Busch (BUD) jumped 2% after shareholders said $65 a share would be a fair price for potential acquirer InBev. Macke said he likes the BUD story. Nvidia (NVDA) rose 3% after Goldman Sachs Group upgraded the stock to buy from neutral. Adami said the stock is worth watching and Intel (INTC) would be smart to buy the company. Monsanto (MON) popped 5% after Morgan Stanley raised its estimates on the seed company. Najarian said ag names have been on fire. Level 3 (LVLT) jumped 13% as investors drove up smaller telecom stocks following the Verizon takeover of Alltell. Adami said there’s large short interest in the name, and he thinks it goes higher. Tercica (TRCA) soared 100% after the French drugmaker Ipsen bought the company out. Adami said this shows the power of biotech.
DROPS- Smithfield Farms (SFD) fell 6% after the meat processing company reported a 94% drop in profits. Macke said it’s a tough time for the food-processing business. Regeneron (REGN) plunged 20% after the biotech company received two downgrades and failed in a trial for its ovarian cancer drug. Najarian said biotechs live and die by the FDA. Jackson Hewitt (JTX) dropped 6% after the tax preparer withdrew its previous guidance and forecasts. Macke said that’s never good news. Vale Resorts (MTN) traded down 5% afer the company missed analysts profit estimates. Najarian said he wasn’t suprised because fewer people can afford vacations.
Final Trade
Macke went with Microsoft (MSFT). Adami said get long Intel (INTC). Najarian recommended Excel Maritime (EXM) due to increasing shipping rates. Finerman picked J. Crew (JCG).
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