Halftime Pt. 2—Four Strong Fundamentals Plays
In a market with such unclear trends and extreme volatility, many investors are going back to the basics and looking at the fundamentals of individual stocks. We tapped our Fast Money traders for their best plays.
Patty Edwards of Storehouse Partners likes Arrow Electronics . It is trading at seven times forward earnings, where in the past five years, it has traded at twelve times. With General Motors continuing production this summer, Edwards doesn't think manufacturing is dead.
Steve Grasso of Stuart Frankel is going with tobacco stocks. He recently bought Altria Group , but because of high dividend yields, recommends Lorillard and Reynolds American .
The utility space is where Brian Kelly of Kanundrum Capital is turning. He likes Dominion Resources' 4.7% dividend yield. If you overwrite it by way of a covered call strategy, he thinks you could boost the yield up to 6%.
Guy Adami of Drakon Capital is going with IBM . He says they have a great balance sheet and a lot of cash on-hand.
CALL OF THE DAY: DARE GO AGAINST WARREN BUFFETT?
Stifel Nicolaus downgraded Berkshire Hathaway from 'hold' to 'sell' Thursday. But why challenge Warren Buffett and sell now?
Try macroeconomic conditions, says analyst Meyer Shields while on Thursday's Fast Money Halftime Report. He says until consumers start spending again, which depends on unemployment, Berkshire's exposure to the US economy is going to suffer.
Brian Kelly of Kanundrum Capital points out that there are two valuations for Berkshire—one for the company itself and another for Buffett's holdings. Shields says Buffett's valuation is particularily valuable during times of crisis. His returns on General Electric and Goldman Sachs were, in part, simply thanks ot his imprimatur on their continued viability. If Buffett were to retire, he thinks it would negatively impact those stocks.
Shields says Berkshire is not a value to buy right now, adding that it's inflated due to fixed income securities are benefitting from low interest rates.
What's the Trade?
The downgrade of Berkshire is a market call, says Guy Adami of Drakon Capital, so he thinks the market overall could go lower. Steve Grasso of Stuart Frankel agrees, also predicting the markets could continue to decline.
CALL TO THE FLOOR: TRADING HEALTH CARE
Shares of kidney dialysis provider DaVita is coming off of its 52-week high, which it hit last month. The Denver-based company is facing several headwinds could make or break the stock's performance.
Speaking on Thursday's Fast Money Halftime Report, CEO Kent Thiry says federal government deficits is his biggest concern. The bigger the deficits, he says, the more lawmakers look at cutting spending and often times, they cut Medicare. That's worrisome for Thiry because 82% of DaVita's patients are on Medicare.
Watch the video to see the complete conversation with Thiry, including his comments on health care reform.
A free agent, NBA standout LeBron James of the Cleveland Cavaliers, is scheduled to announce where he plans to play in an one-hour television special Thursday night.
Last week, James met with the Cavs, Miami Heat, New Jersey Nets, New York Knicks, Chicago Bulls and Los Angeles Clippers. Knicks fans and investors of Madison Square Garden alike are hoping James is in a "New York State of Mind," which brings us to Thursday's Fast Money Poll—Is MSG a buy on possibility of Knicks acquiring LeBron?
CALL THE CLOSE
Brian Kelly of Kanundrum Capital is still a seller of the market.
"I'm staying in for now," says Patty Edwards of Storehouse Partners. "But I think it's a short-term call."
Also a seller of the market, Steve Grasso of Stuart Frankel is hiding in tobacco stocks.
Guy Adami of Drakon Capital is also a seller.
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CNBC.com with wires