tv Fast Money CNBC April 23, 2012 5:00pm-6:00pm EDT
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for nasdaq as well. that will do it for us on closing legal. see you tomorrow same time, same place. follow me on twitter and google plus. have a fantastic night. stay with us for fast money right now. welcome. i'm here for melissa lee. here are the top three trades. the stock down sharply after earnings. we will break down all the action for you. halfway through earnings season, we are taking the score and setting up for perhaps the most closely watched of all, apple. will the results be enough? we will take that position. is it time to double down? why a top rated fund manager is searching for yield in stocks and get the best picks that you can at this stage in the game. this is fast money and let's get straight to the action on
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netflix. >> on the top, it wasn't actually so bad. there was maybe a higher expectation for streaming so that is maybe where the disappointment is. it came in below the top end of the guidance range. this thing has outsized moves and sentiment. the dvd decline was not quite as bad as we thought, but the valuation makes the choice very expensive. >> not today. we bought put spreads. not a big position. i would not spring the bat big in netflix. they are spreads and they were the weeklies that expire on friday. at the moment they are entirely -- >> you have a trade on here. >> i did. i waited until today because the volatility spike and the options are ridiculous in the weekly options. they are up above 180.
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i was able to get 5 asks for the 80 combined with the calls on the weekly options, hopeing it stays above that price. i think the biggest thing that stuck out about this earnings report was the international expansion clocks. that's what seems to be one of the factors that is playing in here right now. although the management team is talking about the fact that they see efficiencies going into the future. now at these levels, the volatility of the options said we will get about a $15 move. that's about what we have. it gets interesting again. >> the quarter was actually fine, but it's 1.2 million and they said streaming ads were from 100,000 to 800,000. take the mid-point and less than half of what they were expecting. i think there will be a trainable opportunity given the
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volume and the shorts will probably cover into this. a huge volume day. to me the path of least resistance is lower. i think you will have an opportunity to trade it tomorrow, but i don't think this is a buy and sell. >> i think this is what they have been waiting for. if you were short in the stock on that move down, this was a stock that went from 60 to about 130. my sense is some will add, the smart ones will cover. >> it takes the heart out of a lot of those who wanted to invest. the average personal home doesn't want to put money there. you take a lot of these out of it and buy a viacom or a cbs or a disney. >> pfizer. >> yes. you can buy that too, but the content providers. >> you reach a point of no return. the competition is ramping up. coin star and at the same time
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you have these huge outlays that they promise. it's $4 billion on and making losses in latin america. isn't there a point in which it tips over? >> yes. go ahead. >> you are close to that, but i think i'm not saying i don't think you invest and buy this, but for a trade smart, it will set up nicely, but it will be from the upper left to the lower right. lower. >> basically. netflix has a history of huge moves on data and the options traders get brave and sell the puts. pete will be okay with the weekly puts. option traders get brave and sell some of these out of the money puts and collecting free money and the second most active weekly put in netflix was the 85 strikes. while 15 blocks away from at the
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money and people were selling those thinking it will be free money and they will have a tough day. >> we will return later in the program by city's top rated analyst to break down further the netflix results in the trades we might get out tomorrow. next trades, we are at the heart of earnings season. due to reporting big names like apple and exxon-mobil, how far has it gone? let's get to it. a big day on the market today. although you recovered some of losses. you feel ind vated because you have been pessimistic. >> our case was that the market and the equity market has been with higher levels in the suburbs. you got up to the mid-1300s and you take stock believing that a lot of them have bypassed what
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was going to be a major problem. spain and the french elections. in italy and when they reasse reasserted themselves, the market would react negatively. >> you put it bluntly and the people like it or not, they happen to be the candidate from france. they are more important than the earnings they run on a nicely basis. >> in short-term, that's the case. at the same time i'm an investor and on the shelf right next to the hook, they let me contribute with the top down. very much believe that in the long-term. the fundamentals are higher. people believe that he is not important to the performance of the short-term. you guys are the first to point out that trend line and that brought a lot of people's attention to it. once they broke that 1370 mark which was a huge level.
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after this, you see a visit of the flat on year. how bad is bad? >> let's be clear. traditional decline and we bring it down around 7% or 8%. that's a normal lead. we are not there yet. our base case scenario is to trade laterally. it's about a month or a month and a half. that has been occurring and given the fact that we rallied 30% off the low. it's not the worst thing in the world to have something of a lateral out come. that's the risk if something goes wrong. i would be happy. >> certain parts of the market where you say enough is enough? this is the time to start entering these? >> certainly you can make that case sunday. for year to date, they have been instant and there is a number of imports that call this
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fundamentals. certainly to the extent that you want to dip in here, you can. i wouldn't be surprised if there was a little bit more downside. >> let's go into how long it is. i can't say. >> he is elected in may. let's say the euros play out. let's be clear. the internal dynamics are a trader. the investor. what matters is you are changing one half of the -- you are removing sarkozy and putting in someone who perhaps more likely is going to be seen as less market friendly. as investors to the extent that we factor in the concerns. you have to get more pessimistic if only because the policies will be different. >> you said say that they matter longer term.
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>> what is shining for you from what you see so far? >> clearly there have been losers. some reports have been poor, but let's be clear. our assumption is that earnings would come in 4% year over year. 4% year over year is not very good, but above consensus. there have been clear winners. united rentals with an excellent report and ultimately in the longer term that drives equities higher. >> if you will agree, eps beats eps and the revenue growth will focus on it candidly. that has not been there continuing to go higher. >> i don't disagree. if you look at the performance, it's clear. if you missed the revenue, you got hit way harder.
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there is a clear pattern here. >> bottom line? >> it's still too early. we will get a number of energy companies reporting now. the energy season has been dominated by the financials. improving the interest margins and our work assumption is through the next nine months or so, the macro will reassert itself and without a doubt later in the year. >> in a negative way. >> i have been saying it for sometime and i will repeat it again. at the end of the year and the end of next year, the economy will be kicked in the face. unless we do something about it, there is no way markets are not coming down. you positive or negative? >> that's always like that. >> let's talk about one earnings statement. it could move the market. coming out tomorrow night into
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thursday, that is apple. it traded 571.70. anybody buying apple? >> we were on the desk last year and you posed the same question. if you owned it, they would lighten up. they are susceptible higher and lower. the price action and it feels like it wants to test lower levels. i would be a seller of apple at this point. >> i did not jump in because it was so volatile, i couldn't figure out the direction it was going in. some of the levels that steve is talking about for a while, a lot of guy his 550 on the radar. i paid 589. did you buy back in? i am long. it got up to 620 and felt like i was a hero and we are back down again. when you look at the implied volatility, again, they are looking for the kind of moves not negative like we see, but a
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monster move. >> how wide? >> it's implied volatilities. it's about weekly options. they are more difficult to read as far as what they're expecting. >> we are at 570. phi folks at home have missed this, i don't think the move is to come in. let them pass and let one of two things happen. either let them whack the stock that will provide you with an interesting entry point and levitate up to the 590 level. you need clarity and you don't have it now. we talked about this last week. exactly what people have been waiting for and want apple to trade lower. today down to 555. let tomorrow come and go and either way it will give you more clarity. >> let me bring you the path. what do you think of what you have been hearing. you have a $700 price target. >> never a dull moment.
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tomorrow morning with at&t will be an interesting gauge. what kind of numbers do they put up? i think overall it will be a good quarter. upside to iphone and one big question mark will be ipad. that's more of a tiling question. that's a good buying opportunity. >> what are about the pessimism? >> i think again if you are taking a medium or longer term view, the strong growth opportunities are for this company. there is timing issues and the ipad and the fact that the new ipad is only available the last couple of weeks in march. that could create some volatilities and the outlook remains good. as you get later in the summer, you have iphone that are weak in the september quarter. there is timing things you have to gaffe nate around. >> what are you looking for in terms of iphone and ipads and mac sales? >> we are modelling 29 million iphone.
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there will be upside to that. we are at 12 million ipads and the assumption is you will see weakness there. on the mac side, you had market research and can be some weakness there. i think all in all, it will be a solid quarter. >> how do you look as far as we have been talking about this for a while. the exposure levels are not quite there yet as far as apple is concerned. is that the biggest catalyst or do you think it's new products in the next six to 12 months? >> i think the new product cycles will be critical and that's what will continue to drive the stock over the medium and long-term. i think it can be another blockbuster product assuming you have redesigned. of course you will have more and more hoopla around itv and we are not betting on that until
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2013. you have several catalysts that will continue to help the stock. >> thanks very much. we will join you there. have a good evening. would you trade apple on the basis of what at&t comes out with? >> i would be surprised, but they are talking about the refreshers that everybody seemed to be keep coming out with and everybody wants to pause. i think you want to read that and see the numbers, but the big opportunity in front of apple is the izian market. >> from the headlines, we have seen priceline has nothing to do with the antitrust that they are putting on apple. we have seen google and a lost these high flyers come in drastically from the d oj headline from 410. google is almost 6%. guys are taking these big players and big broad stocks off the portfolio. >> speaking of that, we will talk about netflix for the results with top-ranged analysts
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martin haney and getting to the bottom of the moves we saw in the markets for metals with the commodities. lots more fast money straight ahead. [ tom ] we invented the turbine business right here in schenectady. without the stuff that we make here, you wouldn't be able to walk in your house and flip on your lights. [ brad ] at ge we build turbines that power the world. they go into power plants which take some form of energy, harness it, and turn it into more efficient electricity.
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a rough evening for netflix. let's bring in mark ma haney from citigroup. they have a target of $130. this is a disaster for you guys, isn't it? >> for people with a buy on the stock, yes, it is. the key issue has to do with the domestic streaming subs. two quarters in a row they come in at the high end of the guidance, but it's below where the street is. for the full year it's above. you you back end loaded the year and that skepticism in the near term will be a lot of pressure on the number.
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they can deliver, but the market has the upper hand right now. >> what are about the slowing subscriber growth? >> we are not seeing that. if you look at the numbers for the quarter, the most important is not the dvd number or the international subnumber, but the domestic streaming number. that came in at the high end of the company's guidance in line with the street numbers. >> forgive me if i am wrong, but isn't that the issue? >> absolutely they have before, but the key issue is the net add goal for the year. this is buried in their shareholder letter. they are calling for 7 million net streeping ads in 2012. the same number they had in 2010. the management mistakes in the back half of last year. they come around the number and that's where it lies. >> i hear what he is saying.
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that's what i mentioned. the guidance is 190,000 to 790,000. domestic streaming ads. they have to crush what they get to the seven million number. do you think it's possible or are they attempting to buy themselves time? >> it's almost impossible to know. you know the business has extreme or significanciesignifi. the december quarter in the wind months for these events. no question about that and whether the street correctly got the level of seasonality remains to be seen. the people shooting this don't believe they can reach the $7 million number. i am going to make the one point where they make the mistakes and two quarters in a row they come in at the high end of the guidance despite competitive moves in the market. it seems to me like they got the business nailed down. >> let me ask you, would you
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make adjustments to your model and what's your price target? >> we will have to figure it out tonight. we will make two other points. they tell you that international and global profitability for the company will come in one or two quarters earlier at the margin. i know the debate on the subnumber, but if they had a weak number and blown out the losses internationally, the stack would be down worse. there is a long-term story that is far from pricing in the stock related to the building. so far they are showing it. >> i have the research from you dated april 20th where you have a buy recommendation and a $130 price target. is that no longer the case? >> absolutely the case. we will listen to the earnings call and the q and o and digest the numbers. >> how about the propering issue? that comes out of the calls. you hearing anything that
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goes forward? >> they will be relatively moderate in terms of content. at most they are spending about 5% of their content acquisition spent on original content. you largely want this as a retailer and not as an original content production company. that's the right formula as a hedge on that. thank you for spurring the time. the next trade, let's talk about the rough day to day. the china data we have and the europe manufacturing data. let's bring it in from the letter for the voou tonight. actually gold did reasonably well. the operative word was
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reasonably. they had beaten it up hard early in the morning on the concerns over europe and people getting rid of risk. gold taking it on the hip. what was more interesting was how much pressure came into the base metals. copper was down as we used to call it in canada, aluminum was lower. we pay attention to the base metals and copper has a ph.d. in economics. they have been turning down and looking very poor and breaking all sorts of support levels along the line. that's disconcerting and does not speak well to the global economy. >> the gold is getting lumped in and once they hit the hell button in metals, gold gets lumped in with it. the moving copper has been troubling and dragging a lot of things with it. can it go lower than the 360ish that is trading now?
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>> actually i think it can. it has problems on the downside and tried to raly this morning and all it could do after nine cents was finish down 6 1/2 or 7 cents. copper to me looks very, very poor. the chart that you had on the screen looks like a broad distribution and that does not speak well to the global economy. if you are long on copper, you find yourself in an uncomfortable position right now. >> we hear from letter x, big steel tomorrow. with steel utilization up, everyone is worried about china. with a 24% short interest in the name, guys will cover even if the numbers don't look great. risk reward, i would rather be a buyer than a seller. >> i am with you on steel. x is something i like to trade and own. it is the quint essential thing and it will hurt. that's always been one of my
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favorites. if earnings are untold in steal, i would rather be a buyer. i would rather sell copper. >> let me ask you. gold is there and coming in reasonably well. the news out of europe would have been positive for gold to rally. >> it's difficult for gold to rally on a day. they were beauting up the euro pretty hard at one time. it's hard when they are thinking and dinging the euro. it was a risk off day and gold is not a risk on or risk off circumstance. they were punching the sell button, selling crude oil and copper and selling gold ask silver. they were selling everything and hitting the button and gold got hit on that. it came back and as i said, it handled things reasonably well. if you are going to trade the metals, may want to say i will sell copper and be a buyer of
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gold and sell silver and be a buyer of gold and sell zinc. i will be a buyer and sell aluminum. >> you have a long armageddon gold position. what does that mean? >> just the case the world comes to an end. >> it's my armageddon trade. what i wish to have any gold other than an armageddon position? all of the metals look unseenly. >> talking about that. >> it was funny. so many small bones in your foot, you drop anything on your feet it would hurt. i dropped a 400 pound table and almost cut the thing off. a couple of stitches and an aspirin. i am pointing that out. psa. >> let's trade. norfolk southern will report after the bell. they follow the growth.
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they were stunned. that's a question for everybody. >> i tend to like it. >> i had the stock for a couple of months. i have been selling calls against this as well. when you look at what they came up with, a lot of these were impressive the way they balanced out the shipments. not just coal. coal would be weaker, but you look at the chemicals, very, very nice. some of the growth areas there offsetting the energy space. i think because of that, norfolk southern does well. >> who else? >> i will jump in. he makes a great point. great put stock performance on a lousy take. look at the stocks performed with kansas city southern. that granted and had a tremendous bounce from the lows on the day. they believe the reports tomorrow before the bell. not a lot you can do there. they whack it like they did last
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time. although valuation is rich compared to the peers. >> let's go to scott nation. you have a trade on this. you have an options trade. >> that's right. norfolk southern is fully value for all the reasons that everybody laid out and pete is right on the money. the ball pump we see before earnings gives us an opportunity to sell calls. i like selling in norfolk southern the may 70 call for about 130. almost a 2% yield. 2.5% and that would have an effective price of 71.30. all of these calls will get much cheaper and may not have a chance to buy it back. one thing is only appropriate if you are along on the stock. norfolk southern has been bouncing around for a couple of months. >> thank you. you can catch more every friday at 5:00 eastern and follow the show on twitter at cnbc options
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with rent2buy from hertz car sales, you skip the lots... and pushy sales people... it's a fast, easy way to buy a used car. three days to try. zero pressure to buy. it's just another way you'll be traveling at the speed of hertz. >> welcome back to fast money. >> making fun of the americans. >> texas instruments moving higher. you love these techs. >> i do. the intel numbers are at a 52-week high. texas has been pulling back ever since. when you look at texas instruments, stocks trading up right now and trading above 33.
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they talked about all the different markets trading well for them. really clicking and when you look across, some of these big facts have been some of the areas where we have seen a lot of the most solid performance and you look at ibm and intel. that's why when you look at the data, you get confused. our next guest manages a-star fund on dividend stocks. there is much more value in dividend-paying equities and bones and rates. where to put the money? >> the largest holding and pfizer. the five-year and 10-year bonds.
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>> sure is. >> keep it clean. >> you look at the yields and you look at the market place and fizer and you look across a lot of companies. you are talking 4 or 5% and you look at the risks. the risks seem lower now. do you agree with that? what's the biggest risk people face right now in the pharmaceuticals? >> it's the hat falling off at the cliff. lipitor of course, but the business put cash in the hands of shareholders. >> i have to ask you the biggest risk facing the stories and the names, with the end of the bush tax cuts and that could have a very, very big difference.
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very big effecta the end of the year. what do you think about that? >> that's that is it's excellent system. they have the potential out come, but whenever there is a change in income tax rates higher or lower, usually market activity. tax rates were much higher. with the price appreciation, the stock has been a monster this past year. even with the 2.3% dividends and that type of thing. >> we look for an increase in cash flow and operating margins and earnings. then paid with dividend yield. the story is not over and n terms of cash flow and continuing to expand. >> what's the problem with the yield. too much headline risk?
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>> it's the legal issues. it's hard to put a name on it. we are not experts and plenty of others who are. >> what about with pfizer to the point that adds another in. with the ruling on obama care. there has to be a trickle down. i know there is, but for you it's too big of a picture to worry about. a global company versus -- >> true, but don't forget it was paid off in the beginning and they negotiated early to pay up front part of the growth with the pharmaceutical charges. they paid up front for obama health care. >> do you not discount that? >> we did own america when they pulled up that morning at 8:30. good for them pulling it themselves when they realized what they were facing in terms
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of litigation. >> remind us what the capital loss was. >> we had just initiated in merck and we were down 10% or 15%. we had a hold and we did a review when the stock price deteriorates. 10 to 15% and do a review of the name. in the case of merck by the end of that week, we were out. >> i might be scared back into it from here. that's another 3% or 4%. >> it's only 30%. the long-term average such higher. you looking at any of the very cash-rich tech companies that could be dividend payers like an apple or a google. >> we own intel and as you were mentioning, we love the 3% yield
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and they continue to reinvest in terms of the sales. that's a great name and we did own ibm and sold to warren buffett. >> it's been great to meet you. thank you very much. the meeting is one of the big events on deck. certainly tomorrow and the day after. we will head to the currency marks to find out how you can be positioning for that. stay tuned. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future.
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it has been a bad day for shareholders. allegations over the weekend for the "new york times" of systematic bribery in mexico. down almost 5% by the close. you hold wal-mart? >> sadly i hold. we sold some and it gets worse before it gets better. you never want to see this on the front page of the "new york times" as a shareholder. i think that -- i'm not surprised it happened. i don't know if it's true.
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i think that's the way you have to do business around the world and it could be harder for them. >> i don't know and that uncertainty is enough to make me feel like i have to pear down. >> you have to settle on news like that? >> i would react the way karen did. i stayed away for the same reasons that have been laid out since 2009. i like the dollar stores better and they did a great job of acquiring a lot of the traffic from the wal-marts and the targets of the world. the dollar tree and family dollar and across the board, the numbers continue to impress. >> today a big lots, last year it was a great place to hide. they were up on the year. that was good. it hung on too long. this i think -- >> join us.
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>> that is option prices were up about 27%. three calls trade for every put on a day where you think we are going craze to buy puts. what's going on is people see that the stock obviously has trouble. they think this is a dip they want to buy. for all the reasons that karen laid out. we really don't know how ugly the story will end up being. they buy calls and they wanted to find the risk. >> it's 8 great headline for the nightly news. a lot of people say it's a buying opportunity. a couple more weaknesses, but i don't think it's a story with the operation of wal-mart. >> time now for money in motion. the traders will be watching closely what happens with the fed meeting and they get the statement on wednesday and
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presumably change expectations on my interest rates. rebecca joins us from jpmorgan. how would you play it? >> we are looking at a slightly less dovish return. un. ment has come down faster than expected. a hike down previously and that could give a hand to the dollar. i will play this for canada. if the u.s. is doing better and the fed acknowledges that, canada has a play with better yields with dividends and you get a better yield. i want to buy it on a dip and we talk about central banks on friday and it's supposed to ease further. a lot of that is factored in and you play the longer term trend. >> interesting. even if we had an asset sell off for almost across the board
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including oil potentially as a result of what's happening with the proof. >> absolutely. the global macro picture influenced by super can tie the commodities, but that's the dip i want to play. i will look to buy the canadian dollar and get around to 81.50 and target a move and have a stock around 80.25. looking at the longer term trend with the technicals. good to see you. >> thank you for joining us. karen has the fine print. nice morning, scott?
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let's hit the twitter and trade. some viewer tweets. what read do you get on the stocks into earnings. are expectations too low? >> we flagged a couple of names to be on board with this. alpha natural and walter. if you look at these, you want to focus on the call. that's in the process of bombing. no one can say bombing, but those are the names i would be picking. >> you have to love the performance and the market down on the s&p. in positive territory. alpha in positive territory. they didn't hold on to that. it was a good day. >> what happened to cvs? a bad take and down more than usual. >> i don't think anything fundamental happened at all today. it was down more than the market and nothing. >> what about this one from 187?
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what are your thoughts? >> the stock is down almost 20% since last month. >> stocks have been all these names have been up. price is truth f. it didn't perform at a good take, what leads them to perform on a bad take. stay away. >> he tweets down with oil at $100 or more, it provides a bottom and endless bottom for the stock. >> i think you will get yourself the bottom you are looking for, but when you look across at chevron and exxon and conco phillips and they are stronger at conco. i continue to be in that name, but chevron you can own. >> will the coach get pummelled? >> kohl's is a monster and made an all time high within the last week and there is talk they may
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take a statement. the comps have been great and buying back stocks. even at 18 times earnings is worth the buy. >> big. she is cute. >> great girl. >> thank you very much. the first move tomorrow when we return. more fast money next. more than 150 million professionals are connecting here. linkedin connects with the big board.
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and now i build them. i am a bigger is better kind of guy. i absolutely love building locomotives. i knew i wanted to design locomotives from when i was very young. [ jahmil ] from the outside it looks like such a simple device. when you actually get down into the bare bones of it, there's so much technology that's submerged. [ rob ] my welds are a signature, i could tell my welds apart from anybody's. you lay down that nice bead and you look at it, i love it. they don't go together by themselves. there are a lot of little parts, and everyone has their job. [ scott ] i'd love to see it out there on the open tracks. and when i see it, i'm gonna know that i helped build that thing. [ train whistle blows ] here she comes! [ bell clanging ] [ train whistle blows ] wow! [ charlie ] well, it's one thing seeing them built, but then to see them out here, pulling freight across america, it makes us proud.
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♪ it makes us proud. when we got married. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule.
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>> outfitters aeo impressive. nobody has a bad thing to say about this company. people looking for the low to mid 20s as far as the price target. >> the rangers will force a game seven at the magic world. number two, the downstream. trinity industries ahead of earnings. wreaks of a fast fire, but i like trn going into it. >> you don't get a response to one of the tweeters. cbs, i like cbs right here. i don't care that it was down a dollar and i don't think anything has changed. >> interesting. >> credit card names are important transactions and go with visa. a lot of cal
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