RadioShack Presenting Delicious Trading Opportunity: Adami
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."
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.”
“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;
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