Word On The Street
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Economic Trade
The traders discussed the future economic prospects ahead of the FOMC meeting set for Tuesday and the PPI number plus the CPI on Wednesday. Mike Darda, chief economist at MKM Partners joined the crew to add to the talk. Darda thinks that Ben Bernanke needs to talk tough about fighting inflation. “The Fed cannot and in my view will not lower rates further to fight the credit crisis. We’re going to have to work these issues out over time, and the Fed is going to have to get back to its role in preserving price stability,” said Darda. He thinks the economic data will be very ugly this week. Darda told investors to play stocks that work in a slow growth environment with high inflation. Terranova said stay with ag names, infrastructure alternative energy names. Seymour said look or stocks that are sensitive to interest rates. Finerman said hedge with value stocks.
Intel Earnings Trade
Chip giant Intel Corporation (INTC) is set to report earnings on Tuesday. Tim Luke, an analyst at Lehman Brothers, joined the traders to discuss his view on the chipmaker. Luke said Intel should report solid earnings and guide in-line. He pointed out that Intel isn’t that exposed to the U.S. and a lot of their business is in growing emerging markets and Asia. He pointed out the stock has support at $18.50 and he sees it trading up too $23. Luke feels the negativity is priced in here and he sees limited downside to the name.
Karen Finerman Value Trade
Finerman disclosed to investors that she bought some Cisco Systems (CSCO) today. She said she thinks the stock is a value and shares are trading at their lowest valuation level in over a decade. Finerman explained Cisco is the leader in its market, has $19 billion in cash and their P/E is low at 12 times earnings. Seymour said he also likes Cisco for its international exposure.
Chartology with Carter Worth
Oppenheimer chief market technician Carter Worth joined the traders to discuss some technical trading opportunities. Worth said mid-cap stocks look better than large-cap right now. He explained that chart patterns for F5 Networks (FFIV) and Skyworks (SWKS) look bullish and are trending higher.
POPS&DROPS
POPS- Macy’s (M) traded up 4% after JP Morgan upgraded the stock to neutral from underweight. Macke sees no reason to buy this stock. Ambev (ABV) added 5% after Anheuser-Busch agreed to be acquired. Seymour said he likes ABV. Hovanian Enterprises (HOV) popped 3% on news that chairman and founder Kevork Hovanian bought 220,000 shares. Finerman said she would still not touch HOV. Owens-Corning (OC) jumped 5% after Morgan Keegan upgraded the stock to outperform from market perform. Terranova said the stock is under water. Coach (COH) shot up 3% on no news. Macke said demand for Coach products could fall off. Canadian Solar (CSIQ) soared 18% after the Chinese solar company raised its second-quarter revenue forecast. Seymour said he likes this CSIQ as well as Trina Solar (TSL), which he owns. Allegheny Technology (ATI) ripped higher by 10% after the company lifted its second-quarter forecast. Finerman said she was impressed with the news.
DROPS- Sunoco (SUN) traded down 4%. Terranova said it’s at a point you can step up and buy some. Airlines were down after Credit Suisse downgraded the a number of companies due to high oil prices. Terranova said get long Southwest Airlines (LUV). Banco Santander (STD) dropped 2% after the the second biggest bank in Europe said it would acquire U.K-based mortgage lender Alliance & Leicester. Seymour said he likes the stock on a dip. Starwood Hotels (HOT) dropped 7% after Goldman Sachs Group added the stock to its conviction sell list. Karen Finerman, said the stock is down 40% on the year so maybe Goldman is a bit late to the party. Sonic (SONC) fell 3% after Banc of America started coverage on the stock with a neutral rating. Macke said sell it.
Trader Radar
Shares of Wachovia (WB) were among the most actively traded stocks on the NYSE Monday.
FInal Trade
Macke said sell Intel (INTC) ahead of earnings. Terranova picked Nike (NKE). Finerman said stay with her Friday trade of long Pride International (PDE). Seymour likes Empresas (ICA) as a play on infrastructure in Mexico. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!