Shares of homebuilders surged Thursday more than 3 percent, but the “Fast Money” pros said the better play might be in related companies.
The stocks, which have taken a beating this year, were buoyed by news that hedge funds have been buyers.
“I like the activity in the space,” said trader Jon Najarian, especially the bigger names, such as PulteGroup, Toll Brothers and D.R. Horton, which all outpaced the sector.
But a better long-term bet might be in such support trades as Home Depot and Lowe’s.
“Those guys were just doing gangbuster business,” he said. “I think that continues in 2012.”
“Fast Money” pro Josh Brown wasn’t tempted by today’s market activity.
“I think this is a velocity story,” he said. “It’s not a price story.”
Brown preferred “fixer-upper” stocks over homebuilders.
Looking at options, he said there were no sellers in such names as Home Depot or Fastenal.
“Valspar looks incredible. Sherwin Williams, which is a lot bigger, is kind of getting into that wheelhouse,” he said.
Home Depot, specifically, was one stock to watch.
“You’re getting a company that grew earnings by 19 percent in one of the worst economies imaginable,” Brown said. “God forbid they get a good economy. This stock could keep moving.”
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Trader disclosure: On Dec. 29, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Jon Najarian is long (AAPL); Jon Najarian is long (AKS); Jon Najarian is long (RIMM); Jon Najarian is long (ANR); Jon Najarian is long (CNX); Jon Najarian is long (JRCC); Jon Najarian is long (ACI); Jon Najarian is long (PCX); Jon Najarian is long (MOS); Jon Najarian is long (ADBE; Jon Najarian is long (WFT); Jon Najarian is long (PNC); Steve Weiss is long (EUO); Steve Weiss is long (FO); Steve Weiss is long (VZ); Steve Weiss is long (WLP); Steve Weiss is short (FXA; Dan Dicker is long oil futures; Dan Dickeris long (IBM) Stock; Josh Brown is Long (VAL); Josh Brown is Long (HD); Mike Khouw is Long (PHM); Mike Khouw is Short (PHM) Calls
Dennis Gartman
Long: We own an “Asian” short term government bond fund, corn, the C$, the A$, and gold.
Short: We are short S&P 500, FTSE 100, and Euro Stoxx 50 futures to hedge the positions mentioned above. We are also short the Euro, Pound Sterling, and Yen.
The CIBC Gartman Global Allocation Notes portfolio for December is as follows:
Long: 10% Canadian Dollars; 10% Australian Dollars; 20% Gold; 10% Corn
Short: 20% Euro; 10% British Pound Sterling; 5% Japanese Yen; 5% S&P 500 Index; 5% Dow Jones EURO STOXX 50 Index; 5% FTSE 100 Index.
For Jim Strugger
Firm makes market in VIX options
Fred Moran
Firm makes market in (AMZN)
