Halftime: Trading American Express, CSX and Corning Ahead of Earnings
With earnings season in full swing, the "Fast Money" traders on Monday discussed how they're trading select companies ahead of and into earnings.
American Express , CSX and Texas Instruments are scheduled to release results after Monday's close. Corning will report earnings ahead of Tuesday's opening bell.
Moshe Orenbuch, an anlayst at Credit Suisse, hopes to hear about American Express' build business. In other words, how much consumers are spending on their credit cards. Being as this is a primary driver of revenues for AXP, Orenbuch hopes for a 15 percent increase.
Orenbuch would also like AXP to address the Durbin Amendment. The new law will put pressure on merchant discounts, which is where AXP gets roughly 60 percent of revenues. He thinks the Durbin Amendment will create this overhang for up to 13 months and said that's cause for concern.
Orenbuch is looking for AXP to report 12 percent revenue growth, but in the end, recommends investors go with Visa or MasterCard . Those credit card companies, he said, have comprable growth prospects. He said financial regulatory reform has put pressure on those names, too, but has already depressed their value to a level where investors should buy now.
Meanwhile, optionMONSTER.com's Pete Najarian will be watching CSX when it reports Monday night. The options trader and "Fast Money" trader has long liked the rails. So he expects the Jacksonville, Fla.-based company to report postive earnings results, but would use any pullback to buy this name.
Finally, Corning will report quarterly results before the bell on Tuesday. Based in Corning, N.Y., the company makes glass that's used in televisions and touch-screen cell phones, among other electronic devices.
Zachary Karabell, president of RiverTwice Research, likes GLW. Karabell said the company has defied expectations and expects it could go to $30 a share. He added that the negativity around LED chip makers, like Cree , may suggest pricing problems could go toward them instead of toward glassmakers.
POPS & DROPS
Stocks extended gains Monday as techs turned a corner and lifted the Nasdaq for the first time in several sessions as investors awaited a handful of major earnings from the sector later this week. In the wake of it all, the "Fast Money" traders were watching these market movers:
Pops (stocks that went up)
Lululemon (LULU) popped 2%: The yoga-wear retailer saw its estimates and target raised at RBC Capital. Nonetheless, Stuart Frankel's Steve Grasso would use any rally to sell this name.
First Solar (FSLR) popped 4%: Goldman Sachs added FSLR to its conviction buy list. Brian Kelly, founder of Kanundrum Capital, likes this name. He thinks it's an "under-looked" sector.
Drops (stocks that went down)
Omnivision (OTVI) dropped 5%: The maker of image sensors for camera phones was cut to ‘neutral’ from ‘outperform’ at Robert W. Baird. Najarian said it's getting decent short interest. He would consider buying shares at current levels given the valuation is interesting to him.
Tyson Foods (TSN) dropped 1%: The meat and protein company caught a downgrade from BB&T to ‘hold’ from ‘buy.' Karabell said rising food costs aren't helping this name.
CALL THE CLOSE
Before signing off on Monday's program, the "Fast Money" traders guessed which way the market could go and revealed how they're trading it.
Grasso said Mondays are usually great for the markets. He thinks the market could sell off later in the week, however.
Karabell noted a lot of names had a correction last week. He thinks the market could go higher in the days to come.
Kelly said the 1,290 level has been "critical" for the S&P 500 index. If the market is unable to break through that level, he would buy protection with puts.
Najarian said that if the volatility index goes to 18, the market could go higher.
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CNBC.com with wires.