Yahoo's Raw Deal - Fast Money (5/19/08)

Recap of CNBC's Fast Money, Monday May 19.

Blame it on Oil?

Pete Najarian said stocks were “decimated” on Monday and volatility is high. He thinks high oil prices might be taking their toll. Macke, however, thinks the market needed to roll over and isn’t surprised at the action given summer options expiration. Karen Finerman thinks oil prices will fall, and Najarian agrees, since the consumer will eventually tire of high prices at the pump. Guy Adami also sees a rollover for oil and noted the transport sector did well in spite of rising oil. He reiterated his prediction for a second-half of the year recovery and Macke says it is time to be long the market, since the S&P is hitting its 200 day moving average.

Going Places: Burlington Northern Santa Fe (BNI), Norfolk Southern (NSC), Wabtec (WAB)

Transport stocks seem to be faring well, but Najarian would buy puts for protection and he would look at BNI and NSC, which is cheap at a price-to-earnings ratio of 17. Adami thinks WAB’s decision to acquire another company is a sign of confidence and is bullish on the brake maker.

Troubled Tech Marriage: Microsoft (MSFT), Yahoo (YHOO), Electronic Arts (ERTS), Take-Two (TTWO), Hewlett-Packard (HPQ), EDS (EDS)

Finerman thinks MSFT partial takeover of Yahoo will give the latter the short end of the stick. Macke says MSFT wants all the segments of Yahoo that are working and wants to leave Yahoo with the dregs. However, he believes in this deal more than ERTS’ proposed acquisition of TTWO. Finerman prefers the latter deal. Najarian has confidence in HPQ’s acquisition of EDs.

Ships Ahoy! DryShips (DRYS), Excel Maritime (EXM) Genco (GNK)

DRYS more than doubled its first-quarter net income and soundly beat expectations. It has benefited from higher rates, but Najarian says those rates could change, but for now the company is making money. EXM reported good earnings and Narjarian thinks the stock is cheap. Adami would wait for a dip from DRYS before buying. Macke would beware of GNK because of insider selling.

How Lowe Can You Go? Lowe’s (LOW), Home Depot (HD), Wal-Mart (WMT)

Shares of Lowe’s dropped on a disappointing earnings report, and Finerman, who holds shares and puts of HD, thinks HD will report it is suffering from declining same store sales. Adami would see an earnings miss for HD as a buying opportunity, and thinks stimulus checks will benefit both HD and WMT.

Disney (DIS) in the Mousehole?

Richard Greenfield, media analyst at Pali Research explained the downgrade of Disney. While the theme parks are performing better than expected and its cable sector is winning, there is concern about its film business, since Prince Caspian was not strong at the box office. The question is how well its Narnia sequel will perform. Greenfield would wait until the end of the summer before buying Disney.

Summer Shorts for Solarfun (SOLF)

Karen Finerman said she wanted to short SOLF after shares jumped on Monday, but she said there weren’t enough available shares

Late to the Tech Party: Intel (INTC), Cisco (CSCO), IBM (IBM), Western Digital (WDC), EMC (EMC)

As Merrill Lynch names tech its favorite sector and Goldman upgrades chips, Adami thinks The Street is late to the tech party and has missed a run in major stocks like CSCO, INTC and IBM. He suggested taking profits in WDC while Najarian would buy EMC and says MSFT is undervalued.

Breaking Out: Corning (GLW), Terra Nitrogen (TNH), Coinstar (CSTR)

Technical analyst Quint Tatro joined the show to discuss breakout stocks. He thinks GLW, TNH and CSTR are poised for a move. Macke disagreed with CSTR as a choice, but says he would have to look at the stock. Finerman thinks the company wastes money. Adami would buy GLW on a pullback.

Trader Radar: Campbell Soup (CPB) traded on large volume on Monday.

Life’s a Beach: Costco (COST), Pool Corp. (POOL), Allergan (AGN), Quicksilver (ZQK)

The group discussed summer plays, and Macke thinks consumers are going to buy beach gear at COST and Wal-Mart. For those who think housing will make a comeback, Najarian recommends POOL. Finerman likes AGN for its skin products and Adami picks ZQK which bottomed in January and has strong international sales.

Final Trade: Macke: Sell Electronic Arts, Adami: Boeing (BA), Finerman: short CurrencyShares British Pound Sterling (FXB), Najarian: DuPont (DD)

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