Halftime—Jon Najarian: Takeover Chatter Driving These 2 Stocks

Shares of Rackspace Hosting hit new all-time highs Tuesday on speculation of a takeover. In the options market, there has been heavy buying of the Nov. 29 and 30 calls.

Takeover chatter has prompted strong activity in a number of cloud computing plays, said Jon Najarian, co-founder of optionMONSTER.com. Things started picking up after Dell said Tuesday it will acquire business-software firm Boomi.

Rackspace's CEO A. Lanham Napier has been optimistic about his company, often referring to it as a "pure cloud play," noted Najarian. But the San Antonio, Texas-based company gets more than 90 percent of revenues not from the cloud, but from managed hosting, said CNBC's Melissa Lee.

Meanwhile, Najarian noted that tech name Acme Packet is also seeing heavy trading. The Bedford, Mass.-based company is another cloud computing play.

Watch the video to see the full conversation.

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TERRANOVA'S BEST UTILITY PLAY

Even though the utility space has been performing "phenomenally well," it's largely been ignored by investors, said "Fast Money" trader Joe Terranova Tuesday.

Earnings have been "excellent," said Terranova, chief investment strategist at Virtus Investment Partners. With electricity production starting to rise, these companies have pricing power. His fave is The AES Corp. because 50 percent of its revenues come from the emerging market.

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GOP TAKEOVER COULD IMPACT THIS SPACE THE MOST

Republicans will sweep both the US House and Senate with Tuesday's election, said Daniel Clifton of Strategas Research Partners.

As a result of a GOP takeover, Clifton thinks the energy sector has the most at stake because Republicans may cut its funding. In turn, companies reliant on government subsidies could suffer.

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CALL TO THE FLOOR: INTERPUBLIC GROUP

Michael Roth, CEO of advertising name Interpublic Group of Companies , stopped by the "Fast Money" studios to talk about the advertising business, whether companies are spending money on marketing and his outlook for the future.

See the full interview by watching the video.

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Najarian expects a "significant rally." Patty Edwards, chief investment officer at Trutina Financial, agreed and is buying overseas stocks, like Herbalife .

Joe Terranova, chief investment strategist of Virtus Investment Partners, recommends Freeport-McMoRan Copper & Gold and Apple .

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Trader disclosure: On November 2nd, 2010, 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 (APA), (AAPL), (AXP), (C), (GOOG), (GS), (FCX), (IBM), (NOV), (ORCL), (PCP), (PEP), (PFE), (UPL), (VRTS), (XBI); Jon Najarian owns (BP) short calls; Jon Najarian owns (LEN) short calls; Jon Najarian owns (WYNN) short calls; Jon Najarian owns (LVS) short calls; Jon Najarian owns (MGM) short calls; Jon Najarian owns (NTRI); Cortes is short (AAPL); Cortes owns (GOOG); Cortes is short (RSX); Cortes is long S&P 500; Cortes owns (K); Cortes owns (TSN); Cortes owns (CLX); Cortes is short crude oil; Cortes is short gold; Cortes owns U.S. Treasuries

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CMS)
Virtus Investment Partners own more than 1% of (CSC)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (FCFS)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SOA)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (WMB)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Patty Edwards
Edwards owns (V) for clients
Edwards owns (PM) for clients
Edwards owns (KFT) for clients
Edwards owns (KO) for clients
Edwards owns (PEP) for clients
Edwards owns (HNZ) for clients
Edwards owns (HSY) for clients
Edwards owns (CPB) for clients
Edwards owns (JNJ) for clients
Edwards owns (KCI) for clients
Edwards owns (MDT) for clients
Edwards owns (BDX) for clients
Edwards owns (WDFC) for clients
Edwards owns (BMY) for clients
Edwards owns (TEVA) for clients
Edwards owns (F) for clients
Edwards owns (PCL) for clients
Edwards owns (TAL) for clients
Edwards owns (XOM) for clients
Edwards owns (CVX) for clients
Edwards owns (PFE) for clients
Edwards owns (WFMI) for clients
Edwards owns (KMB) for clients
Edwards owns (EXC) for clients
Edwards owns (DUK) for clients
Edwards owns (AEP) for clients

For Daniel Clifton
***No Disclosures***

CNBC.com with wires.