Word On The Street
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Microsoft Earnings Take
Microsoft (MSFT) reported earnings after the bell Thursday that missed Wall Street estimates. Finerman said the quarter was disappointing, but she thinks the fundamentals are still in place. She said she will stay long MSFT and she thinks the shares will pop once they resolve the Yahoo! (YHOO) issue. Adami thinks that Microsoft needs to communicate better with Wall Street. Macke mentioned that he wishes he sold his position. Najarian said don’t buy Microsoft if you think you’re going to see a big move. Najarian also disclosed that he sold Nokia (NOK) into strength today after the company reported better-than-expected second-quarter earnings and upped its forecast.
Google Earnings Take
After the close of the market Google (GOOG) announced that quarterly net income missed Wall Street estimates. Macke said Google’s growth rate is slowing. Piper Jaffray analyst Gene Munster said he expects Google to trade sideways for the rest of the summer.
Citigroup Earnings Trade
The traders spoke with Brad Hintz, an analyst at Sanford Bernstein on Citigroup (C). Citigroup is set to report earnings before he market opens Friday. Hintz said investors should expect to hear Citi talk about their mortgage exposure. He recommended investors avoid the brokers and money central banks. “I think they have quite a way to go before they’ve cleaned their balance sheets,” he said. Najarian said he expects financials stocks to pullback after Merrill Lynch (MER) reported a second-quarter loss after the close today.
Apple Earnings Trade
The traders discussed the outlook for Apple Computer (AAPL) ahead of the company’s earnings report set for next week. Piper Jaffray analyst Gene Munster said the fundamentals for Apple are very strong.” I think this quarter is one you want to be long based on the belief that the back half of the year for Apple will be very strong,” he said. Munster disclosed he is long Apple into the report. Najarian said he’s bullish on Apple and the new 3G iPhone should boost Mac sales.
POPS&DROPS
POPS-United Technologies (UTX) shot up 6% after the company said it’s seeing strong demand for its Otis elevator and fire and security equipment. Adami said that the guidance will surprise people. BlackRock (BLK) soared 16% after the asset manager reported strong earnings. Finerman said BlackRock is best in breed. Harley-Davidson (HOG) jumped 7% after the motorcycle maker issued positive guidance. Adami said they crushed numbers. Capital One (COF) moved up 14% after the credit card issuer was started at Buckingham Research with a neutral rating. Finerman said this was a huge victory for these guys. MGIC Investment (MTG) surged 35% on strong sales trends for its policy sales. Finerman said the run was from short covering.
DROPS- Coca-Cola (KO) fell 4% after the soda maker said it would raise prices due to higher raw costs. Najarian said they’re have a tough time. Yum! Brands (YUM) dropped 7% after the company reported weak margins. Macke said he likes McDonald’s (MCD) more. eBay (EBAY) moved down 14%. Najarian said eBay’s problem is their outlook. Safeway (SWY) slipped 11% after the supermarket chain revised its sales guidance. Macke said they missed the quarter. Nucor (NUE) lost 11% after the steel maker missed third-quarter guidance. Adami said he’s still bullish on steel. International Game Technology (IGT) dropped 8% after the company said it’s seeing a slowdown in consumer spending. Macke said he wasn’t surprised.
Oil Drop Plays
The traders spoke with Addison Armstrong about the sharp drop in crude oil prices over the last few days. Armstrong said the trading action in oil is due to liquidation as the banks with weak balance sheets sell out of their oil and commodities positions. He thinks if oil trades below $125 it could hit $117. Adami said avoid Schlumberger (SLB) ahead of earnings and use that report as a “tell” for the trading action in Baker Hughes (BHI) and Halliburton (HAL) ahead of their earnings reports. He recommends buying Exxon Mobil (XOM) and ConocoPhillips (COP).
Face2Face
Royal from North Carolina writes, “How much has the rally in financials (XLF) been related to the SEC’s short sale proposals?” Finerman said some of rally came from the SEC’s announcement to enforce naked short selling, but she thinks the main reason was due to the sector being oversold. A viewer from Washington writes, “What’s your position in natural gas now that oil is on the decline? Chesapeake is down $10.” Najarian disclosed he is long Chesapeake.
Trader Rader
Shares of Safeway (SWY) were among the most actively traded stocks on the NYSE Thursday.
Fast&Furious
Citigroup is set to report earnings on Friday. Finerman said she thinks the earnings will be bad. Honeywell (HON) will also report on Friday. Adami thinks the report will be good. Mattel (MAT) is set to report earnings Friday morning. Macke said he prefers Hasbro (HAS). Schlumberger (SLB) will also announce earnings on Friday. Najarian said he likes the stock.
Final Trade
Najarian selected Chesapeake (CHK). Finerman likes Phillip Morris International (PM). Macke said sell General Motors (GM). 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!