Halftime: Put Money To Work In Goldman, IBM & Others?
Stocks edged higher on Tuesday as investors sifted through a slew of highly anticipated earnings reports.
Both IBM and Coca-Cola reported mixed results, Johnson & Johnson topped forecasts but drug sales slumped, and UnitedHealth soared past estimates.
Perhaps the earnings elephant in the room was Goldman Sachs. The firm said its quarterly profits nearly doubled yet shares traded lower as British regulators followed their American couter-parts in launching a probe into alleged fraud related to subprime mortgage investments.
How should you be positioned now?
I’m watching IBM, counsels Pete Najarian. The overall numbers were strong, although the margins were a little squishy. But I think the sell-off is overdone and I’d be a buyer under $130
I’m a buyer of Coke, says Patty Edwards of Storehouse. I love the dividend that they pay.
I’m watching commodities, says Mike Gurka of Neural. Central banks are starting to talk about tightening a little sooner than expected. That’s making commodities more attractive to investors. In the space I’m bullish coal .
In commodities I think many stocks are undervalued, adds Pete Najarian. As both an energy and resources play I like Cliffs .
I would not play commodities, counters Steve Cortes of Veracruz. Yes we’re seeing a bounce but given the action over the last couple of weeks in this space, I don’t find the move all that material.
As we mentioned above Goldman posted blow-away numbers Tuesday morning but shares were unable to hold gains.
What’s the trade?
I think it’s too early to establish a position in Goldman says Steve Cortes. I think there are just too many headwinds facing this company.
Volatility in this stock has come back dramatically, explains Pete Najarian. But it’s still elevated in the front month. If you’re willing to own this stock there’s enormous amounts of premium in the options.
A ROSE BY ANY OTHER NAME
Shares of Citi traded higher on Tuesday after analyst Christopher Whalen said in a CNBC interview “You've got to throw roses when it's due,” referring to the banks turnaround.
On Monday Citigroup reported a $4.43 billion first-quarter profit.
What’s the trade?
I’d consider playing it with straddles, counsels Mike Gurka of Nueral. But I don’t expect the stock to jump out in a direction – at least not north.
TAKE YOUR POSITION: MCDONALD’S
McDonalds is set to release its quarterly results Wednesday morning.
Considering the stock hit a new all time high ahead of its release, how should you trade it?
I’m a fan of this stock but I’m also a little cautious on the chart, says Patty Edwards.
I’m bullish, says Pete Najarian. Their new products such as the McSmoothie is one more reason that the stock should go higher.
TAKE YOUR POSITION: APPLE
As you likely know, Apple is on deck to report earnings after the bell Tuesday. How should you be positioned?
Oppenheimer analyst Yair Reiner has an ‘Outperform’ rating on Apple stock and a price target of $285.
He tells the desk he’s a little concerned about a bottleneck in Apple’s supply chains, but he doesn’t see it impairing sales.
*For more from Yair Reiner watch the video above.
Want more insights? Click here for Fast Money 360. Find out what fundamentals, technicals and insights from the options world all suggest lie ahead for this stock!
UNUSUAL ACTIVITY: ALLSTATE
Pete Najarian has spotted unusual options action in AllState.
He says the large volume of October 37 calls traded -- combined with the trend of increased call buying broadly --leads him to speculate this stock could make a sharp move higher.
CALL THE CLOSE
Pete Najarian: I think energy pushes the market higher.
Patty Edwards: I’m a buyer of JCrew.
Mike Gurka: I’m a buyer of the Nasdaq on any dips from earnings.
Steve Cortes: I think the market closes lower due to persistent problems in Europe.
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Trader disclosure: On April 20, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (C) Calls; Najarian Owns (YHOO) Call Spread; Najarian Owns (MCD) Calls; Najarian Owns (GOOG) Calls; Najarian Owns (ALL) Calls; Najarian Owns (CLF) Call Spread; Najarian Owns (TCK); Najarian Owns (MRVL); Edwards Owns (VXX); Cortes Is Short S&P 500 Futures; Cortes Is Short (LVS); Cortes Is Short (WYNN)
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