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Halftime: Home Depot Finally Better Than Lowe's?

Thursday, 9 Dec 2010 | 1:13 PM ET

Home Depot caught an upgrade from FBR Capital Markets on Thursday, which gave the No. 1 U.S. home improvement retailer an 'outperform' rating. FBR also downgraded Lowe's to 'market perform,' explaining it thinks Home Depot is better focused on traffic and value.

"They've had a more simplistic message of driving traffic and making sure their value message gets out there with the consumer," analyst Stephen Chick said of Home Depot . "Over the next 12 months, you're going to see same-store sales that continue to outpace their peer and that sets them up at a decent valuation relative to the market."

Home Depot vs. Lowe's
FBR Capital boosted Home Depot to an outperform while taking down Lowe's to a market perform. Stephen Chick, the FBR analyst who made the call, tells the "Fast Money" traders what's behind the move.

What's the Trade?

Guy Adami, managing partner of Drakon Capital, likes Home Depot at current levels. Barry Ritholtz, however, prefers Lowe's over Home Depot.

"It's an easier store to shop into. I think a lot of former Home Depot shoppers have moved into Lowe's because it's just easier to get around," explained Ritholtz, CEO and director of equity research for Fusion IQ. "It's not the contractors' shop. It's the consumers' shop."

View the complete conversation by watching the video—it starts at 1:35.

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KODAK SEES BULLISH ACTIVITY

Shares of Eastman Kodak soared on unusually strong volume in midday trading Thursday.

Ritholtz said the activity is what's known as a liquidity smile — EK experienced a surge of volume a few weeks ago, the activity slowed down and then it picked back up again. He wonders what's driving the stock , being as there's no news regarding the company. His guess is that it's a possible takeover target.

In the options market, Jon Najarian of optionMONSTER.com said the volume is higher than normal, but not the "institutional" kind that he is quick to jump on.

Watch the video to see the full discussion on Eastman Kodak.

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POPS & DROPS

Encouraging news from the labor market has stocks mixed in midday trading Thursday. Here are the market movers the "Fast Money" traders are watching:

Pops (stocks that rose)

Stock Pops & Drops
The "Fast Money" traders look at which stocks are making the biggest moves.

Smithfield Foods (SFD) popped 9%: The Smithfield, Va.-based company's second-quarter profit soared on increasing demand for pork, which led to higher profit margins. For those who own this name, Adami recommends taking profits. Looking at its valuation, he still thinks it's "compelling" on the upside.

Lululemon Athletica (LULU) popped 19%: Shares of the athletic wear retailer surged after forecasting fourth-quarter profit of 46 cents a share, which easily beat the average estimate on Wall Street. Stuart Frankel's Steve Grasso suggests selling off this pop.

Dangdang (DANG) popped 7%: Initial public offerings in China are doing well this week, as shares of Dangdang.com, the Chinese equivalent of Amazon.com, surged 87 percent.

"All these Chinese IPO stocks have just been a mess," Ritholtz complained. "We would tell you you have to be a little careful if you want to play with this. I'd stay clear."

Drops (stocks that fell)

Akamai (AKAM) dropped 3%: The Internet technology stock selling off after investors worry its CEO will not increase its forecast, but instead will focus on a long-term strategy at Thursday's investment presentation.

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CALL THE CLOSE

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Being as the markets have had a "great run" the past few months, Ritholtz said he wouldn't be surprised if it sold off. Adami and Grasso agreed.

Najarian also thinks the markets could go lower. If so, buy.

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Trader disclosure: On December 9, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Jon Najarian owns (BBT), is short (BBT) calls; Jon Najarian owns (SHAW), is short (SHAW) calls; Jon Najarian owns (MSFT), is short (MSFT) calls; Jon Najarian owns (IBM), is short (IBM) calls; Jon Najarian owns (CME), is short (CME) calls; Jon Najarian owns (CBOE), is short (CBOE) calls; Jon Najarian owns (XLF) call spreads; Jon Najarian owns (GS) call spreads; Jon Najarian owns (JPM) call spreads; Jon Najarian owns (BAC) call spreads; Jon Najarian owns (ERTS) call spreads; Jon Najarian owns (GDX) put spreads; Jon Najarian owns (MGM) put spreads; Jon Najarian owns (SIRI); Jon Najarian owns (C); Jon Najarian owns (SFD); Jon Najarian owns (GDXJ) put spreads; Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (S), (X)

For Barry Ritholtz
Fusion IQ Clients Own (C)
Fusion IQ Clients Own (SBNY)
Fusion IQ Clients Own (PCS)
Fusion IQ Clients Own (ACI)
Fusion IQ Clients Own (UNH)
Fusion IQ Clients Own (AGP)
Fusion IQ Clients Own (SU)
Fusion IQ Clients Own (LCC)
Fusion IQ Clients Own (WDC)
Fusion IQ Clients Own (CVE)
Fusion IQ Clients Own (SMH)
Fusion IQ Clients Own (SBGI)
Fusion IQ Clients Own (ACUR)
Fusion IQ Clients Own (EK)

For Steve Grasso
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)|
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co And Its Partners Own (UNM)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (MCD)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Steve Chick
No disclosures

CNBC.com with wires.

  Price   Change %Change
AKAM
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DANG
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KODK
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HD
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LOW
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LULU
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SF3
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