Recap of CNBC's Fast Money, Monday August 25.
Financials Down - American International Group (NYSE:AIG), Lehman Brothers (LEH), ChevronTexaco (NYSE:CVX)
Melissa Lee stated that the major indices closed in negative territory. She continued by saying that American International Group and Lehman Brothers were down as were most financials. Pete Najarian said “nothing was helping this market today.” He said commodities “did not help.” In addition, he said that a “big part” of the downside in financials had to do with Lehman Brothers specifically. Guy Adami said, “I see it trading at single digits,” making reference to Lehman Brothers currently trading at $13.45. He does not see any reason for investors to own the stock, especially when he “does not see the company getting bought out.” Joe Terranova said that what the market lacked today was a catalyst. He wondered what kind of catalyst it will take to move the markets. Jon Najarian said he noticed that ChevronTexaco (CVX) has dropped considerably -- the stock is down 15% to $85.38 in the past three months. Adami said he foresees Richard Fuld, CEO of Lehman Brothers, “going out the door soon.” Pete Najarian questioned whether Lehman Brothers employees will stay working at Lehman Brothers. Answering his own question, Najarian said he believes more and more Lehman employees will leave for better opportunities, since they do not know what the future holds for Lehman.
Elsewhere in Financials - Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), SunTrust (NYSE:STI), Wells Fargo (NYSE:WFC), U.S. Bancorp (NYSE:USB)
The Chart of the Day was Goldman Sachs. Najarian reiterated what he always felt about Goldman Sachs, that it is the best of breed when it comes to investment banks. He went on to say, “If it breaks even lower, it could be considered a buy.” While he does like Goldman, he currently owns Morgan Stanley. Najarian also mentioned how he “loves Goldman and Morgan,” though he said he loves Morgan Stanley more right now. Najraian discussed SunTrust and Wells Fargo, saying that options activity suggests investors feel there is some downside left. Adami mentioned a financial that he likes: U.S. Bancorp. He said “U.S. Bancorp looks the most solid” and should be bought when the stock trades in the $28-$29 price range.
Adami does not like Advance Micro Devices as a company, but he stated that “does not mean there is no upside for the stock.” He feels with the stock being heavily shorted, there is some potential upside investors could benefit from. Najarian said that even though Rambus rose about 3% to $16.22 today, there is more upside left for the stock.
Adami feels Home Depot is trading at a reasonable price, saying that the “valuation is fair” and that “the balance sheet looks great.” He stated that both Home Depot and Lowe's will be interesting until next year. Najarian on the other hand said investors should wait six more months before considering whether it is right to buy either Home Depot or Lowe's.
Terranova said there was no volume today in oil, and he said he feels it is “stabilizing.” He continued by saying, “I am out of the oil trade and suggest others do the same for the short-term.”
P. Najarian noticed some strong call option activity with Titanium Metals, telling investors to “keep an eye on the stock.”
American International Group (AIG)
Thomas Gallagher, a director of Credit Suisse, said he still sees AIG facing more rough patches in the near term that may cause the firm to have to raise capital. He believes the company will have to do raise as much as $7 billion in 3 months. Gallagher said he does not suggest investors buy the stock now but said to wait for the stock to trade at lower levels in a few months when it raises capital.
Nationalization? – Freddie Mac (FRE) Fannie Mae (FNM)
Lee asked whether Freddie Mac and Fannie Mae will be nationalized. Steve Liesman observed that he has not heard anyone say that Freddie Mac and Fannie Mae will not be nationalized, just as Citigroup suggested this morning. He stated Treasury has all options on the table to resolve the issues of Freddie Mac and Fannie Mae. Liesman ended by saying how Freddie Mac and Fannie Mae's preferred shares are great buys if people feel the common stock will not go to zero.
Mike Darda, chief economist of MKM Partners, talked about the economy. He said he feels housing prices will not recover until at least 2009. He suggests that investors be very cautious in this difficult environment.
Commodities Corner - National Oilwell Varco (NYSE:NOV), Freeport-McMoRan (NYSE:FCX) and the Coal ETF (NYSEARCA:KOL)
Terranova feels there are three areas investors can profit handsomely until year-end: oil, coal, and copper. The stocks he feels will benefit are National Oilwell Varco, Freeport-McMoRan and the Coal ETF. He said the three stocks he recommended will perform well for the rest of the year. He also said the dollar will not have a “substantial impact” on his trades, especially since he expects the dollar to “trade sideways from here on out.”
Have You Heard Of? Digi International (NASDAQ:DGII)
It's time to take a closer look at the tiny tickers that are topping the tape. Najarian brought up a small-cap stock that looks promising: Digi International. With a grand total of 500 employees this little networking company turns old school information systems such as checkout counters, factory floors, and even traffic lights into 100% wireless wonders, explains Pete Najarian. He said “I like the company, it has a great balance sheet with zero debt” and it has plenty of growth left. However, he does warn investors to be cautious, since the market has been “sketchy.”
Final Trade – Your First Move for Tuesday August 26.
Pete Najarian recommends going long Titanium Metals (TIE).Jon Najarian likes long United States Natural Gas Fund (NYSEARCA:UNG).Guy Adami recommends buying XTO Energy (XTO).Joe Terranova thinks it is time to smell the roses and back off the market.