Family Dollar, Yum! & Southwest: Fast Money’s Top 3
With Family Dollar trading up to an all-time high, how should you play the discount retailers.
Also the gang trades Yum and Southwest. (Click here to go to the video.)
1. Family DollarFamily Dollar traded up to an all-time high on Thursday, achieving levels dating back to its IPO in 1970. Had you held the stock from that time, your return would be 885%!
“At 15 times earnings it’s trading in line with its growth,” says trader Stephanie Block. “And they have a new COO who’s been focused on merchandise changes. Also there’s been pricing improvement and the comps last quarter accelerated throughout the quarter. All told, it’s not that expensive.”
Yum! traded lower after the company issued earnings that slightly missed on sales in China, a closely watched metric. The restaurant operator did however beat Street estimates by 3 cents a share.
“I’d wait for a pull back,” counsels trader Mike Murphy. “I don’t think the little bit of a miss in China is that big a deal but the stock has had such a huge run, I’d wait. If it pulls back under $70, closer to the mid-$60’s, then I’d be a buyer. For right now I’d wait.”
Southwest posted anarrower than expected loss on record revenue of $3.99 billion, reflecting the company's bigger size since it bought AirTran Airways last year.
“I don’t like the airlines at all. So on this pop, I’d be getting out,” says trader Simon Baker. “I don’t see a lot of catalysts for the stock to go a lot higher in the near-term.”
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Trader disclosure: On Apr 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long IBM; Stephanie Link is long FCX; Stephanie Link is long IBM; Simon Baker’s firm owns AAPL; Simon Baker’s firm owns BAC; Simon Baker’s firm owns GS; Simon Baker’s firm owns JPM; Simon Baker’s firm owns GDX; Simon Baker’s firm owns MS; Simon Baker’s firm owns NFLX; Simon Baker’s firm owns GLD; Simon Baker’s firm owns XLF; Simon Baker’s firm owns IBM; Simon Baker’s firm owns WMT; Simon Baker’s firm owns JOYG; Simon Baker’s firm owns ADSK; Simon Baker’s firm owns DELL; Simon Baker’s firm owns IBM; Simon Baker’s firm owns MSFT; Simon Baker’s firm owns KEY; Simon Baker’s firm owns QCOM
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