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Halftime—Pros: Most Likely Takeover Targets in Retail

Investors are wondering which retailer could be the next takeover target, given J. Crew Group said Tuesday it will be taken private.

JCG shares surged Tuesday after confirming the $3 billion deal, which will be led by CEO Millard Drexler, TPG Capital and Leonard Green & Partners. The $43.50 a share transaction is a 16 percent premium to Monday's close.

The next potential takeover candidate in retail, said Simon Baker of Baker Avenue Asset Management, could be either American Eagle Outfitters or Chico's . Baker noted that Chico's CEO David Dyer has a habit of going in and selling companies.

Another takeout in the retail space is "entirely possible," said Kanundrum Capital founder Brian Kelly, especially given the premiums out there and money is cheap. Joe Terranova, chief market strategist of Virtus Investment Partners, agreed.

"You're seeing a lot of these companies tap the debt markets and now they're going to do something with that capital. They're going to put it to work," Terranova said. "If you can't grow organically, you're going to go out and buy it. In the retail space, you're going to see a lot of that in the first quarter of 2011."

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Baker recommends focusing on specialty retailers, like Urban Outfitters and AnnTaylor Stores .

Watch the video to see the full conversation on the M&A trade.

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UNUSUAL ACTIVITY: TRIQUINT SEMICONDUCTOR

Options trader Jon Najarian is seeing heavy call buying in chip maker TriQuint Semiconductor , specifically in the Dec. 11 calls. The stock is at multi-year highs on the smartphone play.

Meanwhile, investors are trying to figure out just what companies will get their chips into the hot smartphones, including Apple's iPhone and Google's Android operating system. Kelly is betting on the Technology Select Sector SPDR and Semiconductor HOLDRs exchange-traded funds, being as it provides broad-based exposure to this space. With a volatile market, he thinks these ETFs are safer than picking individual names.

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CALL TO THE FLOOR: COGNIZANT TECH

Shares of I.T. outsourcing company Cognizant Technology are outperforming the Nasdaq index this year, but fell in midday trading Tuesday. Does this red-hot trade have more room to run?

For answers, chief operating officer and chief financial officer Gordon J. Coburn stopped by the "Fast Money" studios to share his outlook for CTSH and the technology sector in general.

Watch the video to see the full interview.

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CALL THE CLOSE

Terranova said with the market correcting itself, buy protection.

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Trader disclosure: On November 23, 2010, the day this video was recorded, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Cortes is short (UNP), (CSX), Nasdaq Futures, (AAPL) and corn. Steve Cortes is long 2 Year Notes, U.S. Dollar vs. Mexican Peso, Australian Dollar, Canadian Dollar. Steve Cortes Owns (TSN) and (K).

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JOE TERRANOVA
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CMS)
Virtus Investment Partners own more than 1% of (CSC)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (FCFS)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SOA)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (WMB)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (RTH)
Accounts Managed By Kanundrum Capital Own (XLK)
Accounts Managed By Kanundrum Capital Own (SMH)
Accounts Managed By Kanundrum Capital Own (JJG)

SIMON BAKER
Baker And Baker Avenue Asset Management Own (ODP)
Baker And Baker Avenue Asset Management Own (C)
Baker And Baker Avenue Asset Management Own (CTSH)
Baker And Baker Avenue Asset Management Own (IBM)
Baker And Baker Avenue Asset Management Own (GLD)
Baker And Baker Avenue Asset Management Own (GDX)
Baker And Baker Avenue Asset Management Own (PHYS)
Baker And Baker Avenue Asset Management Own (SLV)
Baker And Baker Avenue Asset Management Own (URBN)
Baker And Baker Avenue Asset Management Own (ANN)

DAVID RIEDEL
***NO DISCLOSURES

CNBC.com with wires.

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