Word On The Street
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Options Action
Jon Najarian noticed unusual options action in AFLAC (AFL). He said options traders are buying $65 out of the money calls on the stock.
Tech Trade
The traders talked about the strength in Apple Computer (APPL) Wednesday off the rumors that the new Mac products could be released soon. Najarian said new products could be coming and it makes sense. Terranova said Apple and Research In Motion (RIMM) are his favorite tech stocks right now. Tatro said Apple could blow numbers away.
Fertilizer Trade
The traders mentioned that fertilizer stocks like Potash (POT), Agrium (AGU) and Mosaic (MOS) all traded up on Wednesday. Tatro said he’s short Monsanto (MON), MOS and POT. He thinks the trend is over. Terranova said he would sell the ag stocks as well.
Dell Take
Clay Sumner, senior analyst of FBR Capital Markets joined the traders to talk about Dell Computer (DELL). Sumner thinks Dell will report a strong earnings report. “We’re looking for Dell to outperform. I think margins could surprise to the upside,” he said. Sumner said margins should improve into the second half of the year and Wall Street isn’t giving the company enough credit. He explained that Dell will benefit from emerging markets like India and China. He thinks the stock is heading to $30. Lastly, he reminded viewers that Michale Dell just bought $100 million worth of stock. Najarian disagreed, he said Lenovo is much better and the stock is heading back to $22.
Housing Trade
The traders discussed playing the housing market. Tatro said the housing stocks look like they’re bottoming from a technical perspective. He recomended the Homebuilders ETF (XHB) with a stop below $17. Adami said play the sector with Home Depot (HD).
Obama Trade
The crew discussed a report from Goldman Sachs Group that said if Obama looks like he is going to win the White House the hospital stocks could rally. Terranova said Community Health (CYH) and Well Point (WLP) are already trading like Obama is going to win. Tatro said buy Tenet Healthcare (THC) with a stop at $5.25.
Fannie & Freddie Take
The traders discussed the news that Fannie Mae (FNM) is replacing their chief financial officer and appointing a new chief risk officer. Jon Najarian said don’t touch either FNM or Freddie Mac (FRE). He thinks both stocks have death written all over them.
POPS&DROPS
POPS- Ikon Office Solutions (IKN) rose 9% after Ricoh agreed to buy the company for an 11% premium. Jon Najarian likes the deal. China ETF (FXI) rose 3%. Tatro told investors to sell half of their positions since he recommended the stock a few days ago. Nucor (NUE) popped 3% off of positive comments from UBS. Adami likes the stock at current levels. Valero (VLO) jumped 4% off news that Tropical Storm Gustav could become a hurricane. Terranova advised viewers to look at the stock. Talbots (TLB) soared 28% after the clothing maker reaffirmed its full-year profit estimates. Jon Najarian said sell the rips despite the fact the stock is cheap. Border’s (BGP) surged 20% after reported a smaller-than-expected loss. Terranova thinks the stock is heading to double digits.
DROPS- Mattel (MAT) fell 3%. Adami likes the stock here. Amylin (AMLN) plunged 23% after the company’s diabetes drug was linked to two more deaths. Terranova mentioned that Goldman Sachs has a $46 price target on the stock. Solarfun Power Holdings (SOLF) dropped 14% after traders locked in profits following their earnings beat. Tatro said he’s done with solar stocks for a while. American Axle (AXL) fell 2% after the stock was downgraded to neutral from outperform. Adami likes Borg Warner better. Dollar Tree (DLTR) lost 4% after the company’s outlook was below Wall Street estimates. Jon Najarian said buy the dips. Brown Shoe (BWS) dipped 3% after the company reported profits were down 80% this quarter and they reduced their full-year outlook. Tatro said this stock isn’t for him.
Final Trade
Terranova said buy Excel Maritime (EXM). Adami likes EMC Corp. (EMC). Tatro picked UltraShort Basic Materials ProShares (SMN). Najarian said buy NetApp (NTAP) off the options activity. The “Clean Tech” sector is poised to be the biggest gainer in 2008. See what our analysts rank as the #1 opportunity today