Starbucks Cools Off - Fast Money Recap (4/24/08)

Recap of CNBC's Fast Money, Thursday April 24. Click on a stock ticker for more analysis.

Apple (AAPL), Microsoft (MSFT), Yahoo (YHOO)

Although Microsoft reported slow sales and lackluster guidance, the group generally remained bullish on the stock. Guy Adami says the stock's decline is just a natural pullback after a "monster run" prior to earnings and thinks the valuation of the stock is right. Pete Najarian noted the stock has been up 12% since April and said 2009 guidance is "phenomenal." He and Jeff Macke would buy MSFT on a dip. Karen Finerman says she is holding MSFT but is not happy with the guidance. Macke says MSFT has no reason to prove itself and doesn't need strong guidance. Yahoo, however, is desperate for a good result. Najarian says MSFT shareholders are hoping it doesn't raise its bid for Yahoo. Apple rallied on MSFT's result and Najarian still thinks the stock is cheap.

Merrill Lynch (MER), Wachovia (WB), USBancorp (USB), Goldman Sachs (GS), Visa (V), American Express (AXP), Mastercard (MA)

MER sparked a rally in financials after announcing it would not lower its dividend. Finerman said this news wasn't surprising and investors are finding an excuse to be long financials. Adami noted a fall in ag stocks and thinks investors are moving their money to financials. Najarian said he agreed with Dick Bove's assessment that it is time to buy financial stocks. Najarian expects bullish earnings from Visa, in spite of the fact it is up 62% from its IPO. Positive action in AXP bodes well for Visa and Najarian commented the company controls 55% of the global processing market. Adami admitted he was incorrect thinking Visa would pull back from its IPO price and would buy MA, which he says is less risky.

The Dollar and Commodities: Freeport-McMoRan (FCX), U.S. Steel (X), Mosaic (MOS), Potash (POT), Bunge (BG)

Adami is bullish on the dollar for the latter part of 2008, and predicts the dollar's rise will mean gold's decline. He identified commodities which do well with a strong dollar, such as FCX and X. Finerman would use the dollar's rise as an opportunity to sell MOS and POT. Macke said agriculture stocks are becoming more volatile and can get punished for almost nothing. Najarian said BG and POT have had solid gains and thinks the companies are attractive because of forward guidance.

China Life (LFC), Baidu (BIDU), China Mobile (CHL), PetroChina (PTR)

On the biggest Chinese stock rally in six years, Tim Seymour said many of the profits in companies like LFC are derived from investments in Chinese stocks. He thinks China is due for a drop and says the 40% EPS growth is priced in. He still likes BIDU and CHL, but he would sell PTR. Seymour has confidence in Chinese infrastructure and the Chinese consumer.

Ford (F), Deckers Outdoor (DECK)

Ford's strong earnings were the result of expanding into emerging market countries and getting rid of sluggish brands like Land Rover and Jaguar. Deckers' bullish earnings came out of the blue and the stock bounced 10%. While DECK had been a darling of shorts, the stock is now rallying. The group discussed the Fed's next move, and Adami predicted a modest 25 basis point cut, but thinks it is better if the Fed does nothing and lets the dollar bounce. Finerman said the Fed has done enough now that financials are lending again. Macke gave the Fed "huge points" and thinks it has done well managing the credit crisis. Finerman predicts there will be no more rate cuts.

Starbucks (SBUX), Burger King (BKC), McDonald's (MCD)

On Starbuck's deepest low in four years, the group evaluated the performance of CEO Howard Schultz. Macke expressed disappointment especially since many people likenedd Schultz to Ford CEO Alan Mulally. Najarian noted Schultz never made a comeback because he never left the company, but was chairman for a while. He thinks SBUX is down on competition from BKC and MCD, while Macke said SBUX is it sown worst enemy. Finerman predicts a comeback for SBUX.

Final Trade: Adami and Macke: Sell Yahoo and buy Microsoft, Finerman: Microsoft, Najarian: Sasol.

Seeking Alpha is not affiliated with CNBC, or Fast Money

Comments

[AmesTiedeman]

SBUX is not going away. I expect this name to be much higher once they make the needed adjustments to their business model. This is a 2-3 year ordeal.

[NormanQ]

I agree with the above poster. SBUX might never reach 40 again, but it is currently undervalued. They have an outstanding brand which isn't going to die anytime soon. They know what they did wrong, they're fixing it, but it's going to take some time to get back to the coffee basics. I'm waiting 2 quarters before I BUY.

[NormanLepoff, M.D.]

Interesting article.

[Onecent]

Just how is DECK, a maker of seasonal fad boots, going to sustain it's profits in this consumer recession going forward? They conceded that their Teva brand for summer isn't doing as well as expected.

Their very small float is easily manipulated and keeps the share price aloft for now.

[1option]

Yes agreed SBUX is undervalued at this price, but it will be a slow run back up for them.

[AmesTiedeman]

F is going to 12 now that Mr. K. is on board. Momentum can work.