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RadioShack Presenting Delicious Trading Opportunity: Adami

Monday, 30 Jan 2012 | 7:06 PM ET

In the aftermarket, shares of RadioShack landed on the Fast Money trader radar with the stock declining nearly 20%.

The sell-off was largely triggered by a lousy earnings report that sent portfolio managers running for the exits.

RadioShack gave a disappointing outlook, forecasting fourth-quarter earnings of just 11 cents to 13 cents a share. Wall Street had expected 37 cents a share, according to Thomson Reuters I/B/E/S.

As if that wasn't bad enough, the company also suspended its share repurchase plan.

But rather than focus on the results, Guy Adami says focus on the resulting market action. And if you're nimble, Adami sees a delicious opportunity.

“The charts have been telegraphing this kind of move for quite some time,” he explains. "The trend line has been moving from the upper left to the lower right for the past year."

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Adami thinks RadioShack stock is now a situation where nimble traders could profit for other people’s pain.

“On Tuesday I think we could see a capitulation sell-off,” he speculates. “If we see that, I would get in – but for a trade. This is the kind of opportunity traders look for.”

Financials: Value Trade or Trap?
The Fast Money traders, with the trade on today's market activity; the tech sector; and RadioShack's after hours sell-off, and whether it's a likely takeover candidate. Also, the trade on big banks, with Fred Cannon, Keefe Bruyette & Woods, warning investors that what looks to be value stocks in the financial sector now, could end up being a value trap, if estimates get cut as they did last year.

“With the sell-off sending the stock down to 52-week lows, shorts will start to cover,” he says. And that should give the stock a little pop.

But again, Adami is talking trade; capturing a short term move.

Long-term investor Karen Finerman isn’t playing.

“The fact that this company is called RadioShack feels dated,” she muses. There’s a lot of competition and they can’t seem to get it right – I’d stay away, even if it is cheap.”

Joe Terranova agrees. “It could even be an acquisition target – but unless you're extremely nimble, right now you can’t own it.”





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Trader disclosure: On Jan. 30, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova owns AXP; Terranova owns F; Terranova owns APC; Terranova owns WFM; Terranova owns OXY; Terranova owns XOM; Terranova owns TRLG; Terranova owns SBUX; Terranova owns JNPR; Terranova owns VRTS; Terranova owns IBM; Terranova owns LQD; Terranova owns SU; Terranova owns SJM; Terranova owns BRCM; Terranova owns MUB; Terranova owns EMC; Terranova owns CSCO; Terranova owns V; Adami owns C; Adami owns GS; Adami owns INTC; Adami owns AGU; Adami owns MSFT; Nations is long BAC; Nations is long C; Nations is long SPY;

For Amelia Bordeau
No disclosures

For Emil Brolick
No disclosures

For Dennis Gartman
Gartman is long gold
Gartman is short Euro

For William Duff Gordon
No disclosures

For Kathleen Smith
Renaissance has a position in RENN
Renaissance has a position in ZNGA
Renaissance has a position in GRPN

For Fred Cannon
Bank of America Corp. (BAC - $7.29, Market Perform)
KBW expects to receive or intends to seek compensation for investment banking services from Bank of America Corp. in the next three months.
KBW currently makes a market and/or acts as a liquidity provider in Bank of America Corp. securities

Regions Financial Corporation (RF - $5.31, Market Perform)
KBW expects to receive or intends to seek compensation for investment banking services from Regions Financial Corporation in the next three months.

KBW currently makes a market and/or acts as a liquidity provider in Regions Financial Corporation securities

U.S. Bancorp (USB - $27.86, Outperform)
KBW expects to receive or intends to seek compensation for investment banking services from U.S. Bancorp in the next three months.

KBW currently makes a market and/or acts as a liquidity provider in U.S. Bancorp securities.



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