Word On The Street
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Investment Bank Trade
Goldman Sachs Group (GS) reported a 11% drop in quarterly earnings today. Terranova said buy Goldman below $160. Morgan Stanley (MS) is set to report earnings on Wednesday. Adami said Morgan is setting up as a buy. Najarian disagreed and said the put options activity he is observing in Morgan is bearish. He said options activity in KeyCorp (KEY) is also bearish. He recommended Visa (V) and MasterCard (MA) for better ways to play the finanical sector and for a play on paying for gas at the pump. Macke thinks Morgan will be hideous.
FedEx Earnings Trade
FedEx (FDX) is set to report earnings on Wednesday. What is the trade? Adami said don’t look for any big surprise to the upside when FedEx reports. He recommended buying shares in the low $80s. Najarian said it’s too early for FedEx and Macke agreed. Terranova explained that Goldman Sachs Group (GS) put out a positive note on Amazon.com (AMZN). He thinks its a great play and he likes the stock.
Medial Breakthrough Trade
The traders discussed several companies that had exciting medial advancement news on Tuesday. Najarian explained that a new Alzheimer’s drug from Elan (ELN) and Wyeth (WYE) showed positive results in clinical trials. If the drug were to hit the market, analyst are saying sales could be $13 billion - making it the biggest drug ever. Najarian likes the news, but he reminded investors that the drug is only in Phase II trials. He told investors to keep an eye on Myriad Genetic (MYGN) for their Alzheimer’s drug that’s in Phase III trials. Teva Pharmaceutical (TEVA) released positive data for its Parkinson’s treatment in a Phase III trial. Najarian said the news was great for Teva because the company has a production line, so if the drug gets approved it will flow to the bottom line. Allergan (AGN) won FDA approval for an injectable eye drug that treats retinal diseases. Najarian said the news is huge and the drug could be a monster for them. Najarian said the MYGN is the most investable of all the developments, but he also likes Allergan.
Callaway Golf Trade
Shares of Callaway Golf (ELY) dropped 2.4% one day after Rocco Mediate finished second in the U.S. Open. to Tiger Woods. Callaway Golf is Rocco’s sponsor. Is it time to buy the stock on the dip? KeyBanc analyst Scott Hamann joined the traders to discuss Callaway. Hamann reiterated his buy rating on the stock today after he did some channel checks and found out that sales aren’t as bad as Wall Street thinks. He said that Callaway is a global growth story with 50% of sales coming from abroad and those sales are more profitable. He thinks the domestic weakness is already priced into the stock.
Trader Radar
Shares of La-Z-Boy (LZB) were among the most actively traded stocks on the Nasdaq Tuesday.
POPS&DROPS
POPS- Apple Computer (AAPL) popped 3% after Piper Jaffray said they expect strong iPod sales. Najarian said it was a great opportunity on Friday to buy this stock. Monsanto (MON) traded up 5% after the company submitted its SmartStax insect and weed product to the EPA for approval. Terranova said $150 here it comes for MON. Alcatel-Lucent (ALU) moved up 4% after the company said it wont a billion dollar contract in China. Macke said the news is a selling opportunity. Mentor Graphics (MENT) soared 21% after Cadence Design offered to buy the company for $1.6 billion. Najarian said that’s a big pop. DryShips (DRYS) ripped 7% higher after rival Genco Shipping announced it will buy 6 new ships. Terranova said don’t read too much into it.
DROPS- American Express (AXP) fell 4% after Friedman Billings Ramsey issued a underperform rating on the stock. Adami said insiders are selling, so he isn’t buying. Washington Mutual (WM) dropped 8% after Goldman Sachs Group (GS) said that US banks might need to raise $65 billion in new money. Adami said wait for more capitulation and we didn’t have it today in WM. Cinemark Holdings (CNK) plunged 9% after Morgan Stanley (MS) downgraded the stock to equal-weight from overweight and cut the price target. Macke said tough business to be in. Citrix Systems (CTXS) fell 5% after Friedman Billings & Ramsey downgraded the stock to market preform from outperform. Adami said stay away.
Summer Trades
The traders discussed some beer plays for a summer trade. Macke said Constellation Brandz (STZ) wont work cause its too exposed to wine. He prefers straight beer plays like Boston Beer Company (SAM), Molson Coors (TAP) and Anheuser-Bush (BUD).
Face2Face
Speculation hit the streets that IBM (IBM) might make a bid for Cree (CREE). Najarian said these rumors pop up every two or three months for Cree. He said he doesn’t think anything will materialize.
Final Trade
Macke said trim positions in Activision (ATVI). Adami picked Memc Electronics (WFR). Joe Terranova suggested Burlington Northern (BNI). Najarian said buy Energy Conversion Devices (ENER) at $70.
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