GO
Loading...

Halftime: This as Good as Massive Tax Cut?

Are middle and lower class Americans looking at a massive tax cut?

Maybe not in the strictest sense, but "Fast Money" trader Steve Cortes thinks the equivalent of a massive tax break is on the way in the form of gasoline prices, which he thinks are about to head much, much lower.

Cortes said his main thesis lies with the downward trend in gasoline futures. "We started the month of May at $3.36 and now its below $3 a gallon," he said, adding that a slide in prices at the pump are just like “a massive tax cut for middle and lower income Americans.” That means consumers will have more money to spend on staples.

And not only will consumers win, but retailers who cater to the middle class will get a boost as well.

Cortes isn't just talking the talk; he's walking the walk. He's long Wal-Mart and also thinks names like Dollar Tree , Dollar General and Family Dollar will all benefit from the drop of energy prices.

And Cortes isn't alone. Top hedge fund manger Bill Ackman seems to share Cortes' point of view. Ackman is also a buyer of Family Dollar, telling an investing conference he thinks FDO is reasonably priced and may be acquired.

One name not on Cortes’ buy list is Lululemon . “The Lululemon party is ending,” he said. “High priced apparel is not going to last. It’s a name I’m looking to short.”

The athletic apparel retailer was downgraded Thursday to ‘underperform’ from ‘market perform’ by FBR Capital Markets.

But two teen retailers got better news from FBR.

American Eagle was upgraded to ‘outperform’ from ‘underperform’ by FBR analyst Liz Dunn, who believes the stock has gotten way too cheap.

“I think things are turning around there,” she said. “I think there are catalysts, potential catalysts in the form of management change.”

Aeropostale was also upgraded by FBR, to ‘market perform’ from ‘underperform.” Dunn said she believes value investors are “fishing around” this stock, and she doesn’t see a lot of further downside.

So what about perennial favorite Abercrombie and Fitch ?

“They’re clearly experiencing strong sales trends.” Dunn said. “I think that it’s a momentum name that still seems to have strong momentum behind it.”

In the end, Dunn said it is important to remember that in the teen market, more than one stock can work at the same time.

______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.


Trader disclosure: On May 26, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;
Cortes owns (SO); Cortes owns (EXC); Cortes owns (KFT); Cortes owns (K); Cortes owns (WMT); Cortes is short Nikkei; Cortes is short EEM vs S&P long; Cortes is short AUD; Cortes is short GBP; Cortes is short EUR/JPY cross; Cortes is short (CAT); Cortes is short (DE); Adami owns (AGu); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Grasso owns (AKS); Grasso owns (AMD); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (C); Grasso owns (D); Grasso owns (HOV); Grasos owns (JPM); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST)

Brian Kelly
Accounts Managed by Brian Kelly Capital are long australian dollars
Accounts Managed by Brian Kelly Capital are long new zealand dollars
Accounts Managed by Brian Kelly Capital own (FCX)
Accounts Managed by Brian Kelly Capital own (SLW) calls
Accounts Managed by Brian Kelly Capital own (TLT) calls
Accounts Managed by Brian Kelly Capital own (IPI) calls
Accounts Managed by Brian Kelly Capital own (AAPL)
Accounts Managed by Brian Kelly Capital own (BHP)
Accounts Managed by Brian Kelly Capital own (MCP) calls
Accounts Managed by Brian Kelly Capital own (SLV) calls
Accounts Managed by Brian Kelly Capital own (NEM)

Fot Steve Grasso
Stuart Frankel & Co and it’s partners own (ABX)
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 (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MSFT)
Stuart Frankel & Co and it’s partners own (MU)
Stuart Frankel & Co and it’s partners own (NEM)
Stuart Frankel & Co and it’s partners own (NYX)
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 (SDS)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners are Short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Liz Dunn
No Disclosures on AEO
FBR Capital Markets is a Market Maker in (ARO), (LULU)

For Eric Jackson
*No Disclosures



CNBC.com with wires.

Contact Halftime Report

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET