Energy: Arch Coal (ACI), Chesapeake Energy (CHK), Apache (APA), DuPont (DD), On an earnings warning from ACI, Guy Adami was concerned about energy in the near future and thinks many companies in the sector, such as DD are on the verge of topping. Pete Najarian noted runs in CHK and APA. Jeff Macke discussed oil’s rise close to $100 and suggested investors sell high and buy low. Najarian thinks the Howard Weil Energy Conference will have a major impact on energy stocks.
Apple jumped after an upgrade and fell flat again. AMD warned ahead of earnings and Najarian commented that competition among chip companies has been “brutal.” Although MU and SNDK have been performing well, every chip is vulnerable and he prefers INTC, because it is diversified beyond chips. On the MSFT and Yahoo deal, Finerman says nothing is really happening and MSFT has Yahoo backed in a corner. Macke said Yahoo was being a “whiner” and Najarian said if MSFT price declines, so will the price of the Yahoo sale.
WM gained 30% on news the company will receive financing to the tune of $5 billion. Karen Finerman welcomed the news but was surprised a private equity firm would be willing and able to put up the capital. Macke predicts smart money might start looking at Wamu. Najarian remarked the financial rally was low volume, which made selling easier, and that the market on Monday was powered by commodities. The group concluded MS is currently the best trade in the financial sector, and the bank can reap the benefit from Chinese growth. Finerman says she prefers GS which is consistently outperforming MS.
Adami was disappointed by AA’s earnings and didn’t buy management’s explanation. He still thinks the company has potential in Asia and that AA may still be a buy. Finerman predicts AA could be taken over. Macke, however, wasn’t surprised by the negative news from AA. Najarian said Goldman Sachs raided 2008 to 2009 numbers for Alcoa ahead of earnings.
Gas Prices: Mastercard (MA), BJ Services (BJS), Baker Hughes (BHI) As gas prices reached record levels, Adami is bullish on MA, since people pay for gas with credit cards. Najarian likes BJS and BHI and noted insider buying in Chesapeake Energy.
Activist Investors: Icahn and Motorola (MOT), Bill Ackman and Borders (BGP)
There is now peace between Icahn and Motorola management, and Icahn is now allowed access to MOT’s board. Finerman is not sure what the impact will be, but it should bode well for the company. Macke is interested in BGP after Bill Ackman set aside funds to keep the company afloat.
Jon Najarian appeared on the show to discuss concerns over the performance of consumer staples such as PG in earnings season. He thinks that while consumer staples will be on the wane, energy and agriculture will be strong, and he would wait for a pullback in both sectors before buying. He added it is not worth it to be long the S&P 500 in earnings season, since earnings creates a climate for stock pickers. Macke would sell into gains of companies such as Wal-Mart (WMT). Jon Najarian said both JOSB and PGR may be buys going into earnings.
Kris Jenner, manager of the T. Rowe Price Health Services Fund discussed WYE and ELN’s rise on the news of their upcoming treatment for Alzheimer’s disease. He commented the drug would be the most advanced of its kinds and has more than a 50-50 shot at approval. He believes the drug could be worth $10 billion. Najarian commented Eli Lilly (LLY) and Myriad (MYGN) are also developing Alzheimer’s drugs.
Tader Radar: Columbia Sportswear (COLM) posted a decline on unusual volume today.
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