Skip to main content

tv   Fast Money  CNBC  June 7, 2016 5:00pm-6:01pm EDT

5:00 pm
nor peanut butter, which was my other idea. >> lucky charms, the international standard in cereal. >> and standard for 420 as well. rob, mike, thank you both so much. that does it for us on "closing bell" today. "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site, i'm melissa lee. the trade errs are here. if you missed the rally, don't worry, because we may have identified the ultimate catch-up trade. plus, stocks have surged 17% from their lows in february. but a number of widely held names are below the february lows. and later on, we'll tell you about the rumored mega merger that had savvy traders in a downright frenzy today. but we start off with what could be the ultimate momentum trade. oil trading above 50 bucks a barrel for the first time since july. could energy be setting up for
5:01 pm
the perfect trade. pete, what do you say? >> we've been talking about how technically it's been holding on to the 50 and 200-day average. the xle is the big cap names. the names have absolutely been performing. look at the way the xle traded today. there are some of the dash for trash names. i'll give you a good example. today i bought options out in chesapeake. if energy's going to do what it's been doing, higher highs, lower lowers, that we're going to see some of the most beaten down names. to maybe start to have participation as well. >> i think, look, the fundamentals have clearly not been in focus here, right? this is a trade -- this is totally a sentiment trade. this is a momentum trade. don't jump in head-first thinking equities are at par where the commodities are trading. bottom line is, what we're seeing, fundamental guys
5:02 pm
actually pulling back and making sales at these levels. maybe getting a little long exposure for momentum trade higher. the equities probably go a little bit higher. they always go further than you think. ultimately this is not a fundamentally tested trade. >> that's fine. back to the original question, is this a momentum trade you stick with for now? >> it's a momentum trade you could stick with. i would be a buyer of the service name. the osx is up 13% year-to-date. stay away from refiners. >> why series names? >> because they lag on the way up. everyone was cutting those service names, because the rigs weren't on. they were decreasing in numbers. wells were being shut down. so if you have that now, and you start to pick up, guys are going to produce more at $50 a barrel. that's where you want to put the money in the service names. >> the valuation, like schlumberger, haliburton close to 50 times forward earnings.
5:03 pm
both traded close to three times book. they're going a lot higher than they thought they would. goldman sachs i think put schlumberger put them on the buy list. at a certain point, valuation will matter in this space. this, to me, assumes crude is not stopping at 50. it's going to 75, 80. >> it doesn't have to move. as long as crude stays at 50, and holds even in the 40s, 45 to 50, the service names grossly underperform. so guys that have been in the names have been rotating out trying to capture that. chevron, exxon, totally different story. >> some might make the argument that it's better if it stays at 50 or so. because we won't be in the self-defeating rally, where it gets high enough so people put production back on line and it lowers the oil prices. >> they get the little extra turbo boost because of what they did when things didn't look very good. outperformance of something like a conoco, the question i would have, because i'm in the trade, i like the trade, is something
5:04 pm
like the pipelines. i'm still in some of the names that are out there, kinder morgan and some of these. i think the pipeline trade continues to work. i think that's the place to be. i like the pipelines right now. >> i agree with grasso 100%. the oih, the service names i would be sticking with here. i would say this trade's got way too much juice. look at the names with the highest shortages are through the roof. >> haliburton is at a high. >> i get it. >> what i'm saying is, the line in the sand, people look at $60 oil. that's where traders think it could potentially go to. it will come shy of 60. maybe it gets to 58 bucks. but the reality is, the momentum can carry this trade longer than most people think. i think there is upside there. do i buy into it fundamentally? absolutely not. >> are the energy stocks going to move higher, that's fine for the market? >> the broader market didn't have energy participation.
5:05 pm
i think you've taken a lot of pressure off a lot of the financials under the microscope of what if crude oil goes to 18, $19. pete mentioned freeport. but stock not been performing. it's got a big energy component. copper quietly has been getting obliterated almost on a daily basis. it's more of a copper company than an energy company. you've got to be careful with that. >> copper signifies global growth. so to your point about energy running, it is all momentum. it's not about global growth. right now it's all about positioning. they were so underpositioned in the service names, that's why they're reaching for it. >> is this really a good thing for the market? it's not a barometer for global growth. does it mean anything in a sector that -- >> i think it's more of a trade. >> that's what we all agree on. if oil's above 50, you go back to all the names that were in
5:06 pm
the 20s. we all hated them. over 50, we hold over 50, those names have a little bit of lift underneath them as well. >> anybody do anything today? >> real quick, absolutely stay with the bond market. the back end of the curve continues to be stubbornly low. german ten-year, i think it's at historically low levels. i still think despite gold me andering around here -- >> with oil over 50 -- actually, after ron barron, i know we'll talk about this later, i went to tesla. >> this is a first. is now the time to buy energy? as we've been talking about so far in the show. dennis gartman joins us for a very special appearance live here at the nasdaq, in the flesh. so, dennis, what do you think about this move in oil? >> it still wants to go higher. the term structure continues to look strong.
5:07 pm
we watched the contango. watch how the front months trade relative to the back months. six months ago, that was very wide. it was telling you that you could store the crude oil, bidding to go into storage. now that term structure has completely changed. we've almost gone into a backwardation at some point. especially with the problems two weeks ago in canada. that term structure has narrowed dramatically. you can't store crude anymore. crude is not bidding to go into storage. it's a fundamentally strong circumstance. the trend is up. you can't fade it. >> it sounds like yellen is on the sidelines. i bring that up because of the impact on the dollar and oil. in terms of your view of oil going to 60, does it almost not matter at this point? >> i think the trend is so strong at this point, it wants to get there. look what's going on in the grains. strange circumstance there. look what's going on in gold. what's really interesting, watch
5:08 pm
the bond market. here's the bond market. it refuses to break. it's staying very strong. it looks like it wants to break out. it's an interesting phenomenon where commodities are getting strong and the bond markets are getting strong. interesting circumstance. >> copper, commodities -- not all commodities getting strong. >> it has failed lately. >> correct. the question is, does copper need to participate in that same way. it let us out and now it's failing out. >> i'm not sure. the other base metals, tin is doing quite well. copper is the only one that's not doing well. it's an interesting phenomenon. >> aren't you concerned when we were talking with you when you were remote, how quickly it goes from a glut to all of a sudden we're chasing it. when we start to see rigs come back on, we opened up the show talking about how the companies around $50, the break even basically, but if we rally a little too much, you'll see the glut back on, not in a month, in a week. >> the problem will be, you don't need many new rigs to come on to have a dplut.
5:09 pm
we can now drill one hole and drill 18 different pipes out of it. we don't need nearly the number of rig counts to get production to increase that we used to. a mere two and three years ago. >> doesn't it take time to bring the workers back online? i'm not saying we won't get into a glut situation if we go much above 50 at all. it's not like turning a faucet on. >> two months. >> two months? >> two months. look how quickly they're bringing people back into canada from the fire circumstance. they're getting them back in in weeks. >> i want to go back to what you said about the bond market being so strong and commodities being so strong. you called it interesting. decode that in dennis gartman-ese. what does that mean? >> it's an anomaly. if you see grains rallying, wheat rallying, crude oil rallying, gold rallying, you see the bond market weakening. now it's not. it's an interesting phenomenon that is unusual, different, and
5:10 pm
it doesn't normally happen. something's taking place -- >> does it give you a bad feeling or good feeling? >> an uneasy feeling. >> that's what i was getting at. >> dennis, the '90s, there was a report that everybody used to wait for, the money supply report. >> thursday afternoon. >> nobody talks about it anymore. if you want to make it as simplistic as possible, as money supply continues to go up, so does every other asset that people are chasing that money with. that means they're chasing in the bond market, and they're chasing in the equity market despite what i think are excessive valuations. >> so you're saying connecting the dots -- >> connecting the dots to try to answer -- i'm not saying -- as long as money supply continues to rise, you're going to have these anomalies take place. >> where does the money go to? it goes to the bonds, equities and commodities. there's an excess supply of money in the system and it's chasing everything. >> yeah. >> it's fast money. >> does this ever end well? >> it will end -- >> the assets imply it will
5:11 pm
correct itself, and that there will be pain on the other side. >> here's 42 years of experience. it will end when it ends and not a moment before. how it ends is probably not pretty. but if you fade it, if you try to anticipate when it's going to end, it will probably go in your face a lot longer than you think possible. >> i just got that in the middle of a fortune cookie this week. huge cookie. more like a scroll. >> it was a scroll in a fortune cookie. >> thanks for coming by. always good to see you. dennis gartman of the gartman letter. you think it ends badly? >> you know, but i'm not -- i don't know when that is. i'm not pretending to know when that is. when you think about what's going on, if you believe central banks can manufacture, can engineer out of everything, and then it ends rosy for everybody, there will never be a problem again in the history of mankind. by definition, it can't end well, my opinion. ron barron is betting big on tesla saying it's one of his
5:12 pm
greatest long-term bets. and you won't believe how long he wants to hold the stock. and later, the s&p bottomed back in february. several widely held stocks have quietly fallen much, much lower. we've got the names and whether they're worth the buy when "fast money" returns. ♪
5:13 pm
5:14 pm
"dinner!" "may i be excused?"
5:15 pm
get the new xfinity tv app and for the first time ever stream live tv, watch on demand, and download your dvr shows anywhere. welcome back to "fast money." a very big day for tesla. the stock surging to the tune of 5% this after billionaire long-term investor ron baron had this to say about the stock. >> i think this is one investment we can make $6 billion or $7 billion in profits. there's a very good chance i could own this stock for 10, 15, 20 years. i think this could be one of the largest companies in the united states, and the whole world. >> one of the largest companies in the whole world, pete. >> the most interesting part about it, not only the 10, 15, 20-year plan he talked about, but the competition and the fact that tesla, they would have had competition five years ago, but he believes right now they don't have competition anymore. and he talked about the battery
5:16 pm
factory as well. matching what the car sales are. $300 million investment presently that he thinks could be a 6 or $7 billion number in 10, 15, 20 years from now. >> you eat that up, pete? >> i also saw an incredible amount of call options in there trading today. incredible. each strike all the way up. it was amazing to see how much volume was coming in there today. it took a little while, but it started to run with the rest of the market. when oil is going higher, we talk about it all the time, whether it's right, wrong or indifferent, when oil goes a little bit higher, you see tesla go a little higher as well. >> there would have been competition five years ago. how about five years from now? elon musk was talking about the car industry and -- >> it has to go forward. >> more like a startup culture right now. all these companies -- who is to say tesla is now in the making right now. >> i love how he says, though, he's going to make x amount of
5:17 pm
billions. does anybody ever say i'm going to lose x amount of billions on the trade? it took him three years to establish this position. that means his premise was based on three-year -- i think he's not looking at where we're at right now. >> what is he missing? >> he's missing the fact that everyone's making an ev vehicle. but what he is right on, the valuation could be all about the batte battery. that's only the icing. >> no, i agree. i think first leader, front line leader is super important. look at aws in the cloud versus everybody else. they have such an incredible lead. amazon has to screw it up for it not to work. they're so far ahead of everybody else right now from a technology perspective, they've got the leading edge. >> it was may 18th, goldman sachs news in the morning with comments about tesla. in the afternoon we heard about
5:18 pm
a secondary. what we said that night, the 19th or 20th, see how it trades off the secondary. guess what, the stock was trading 208. the stock has been off to the races since. we talked about this for quite some time. pete always say play with options. but if you're in the stock, and we said it then, you trade it against that 215 level. the risk/reward in my opinion continues to set up well. >> ron barron, in or out, 210, 212, right in that level there. pretty interesting. >> an absolutely brutal day for valeant. plunging 14% after slashing guidance again and reporting a weaker than expected first quarter profit, citing ongoing challenges. $31 billion in debt. >> look, there's a scenario where there's a lot of unknowns, and i get it. i look at this company and say, is there going to be an issue
5:19 pm
from the standpoint from a breach in the debt covenants? >> why. >> roughly $8.5 billion, very unlikely when you're in a scenario like that, that you have a breach that's not necessarily where a band-aid doesn't get put over it. there's some sort of term restructuring or what have you. they could issue stock to pay off debt if they needed to. but the bonds, looking at really the long dated bonds trading roughly 80 cents on the dollar, that could be where the opportunity is to strike and make some mean. that's where i believe there will be people jumping in. they're very cheap. they're not high yield. they're b rated bonds that you could buy very cheap. >> they need to sell off assets, though. you have see all the acquisitions. >> the question is, can they sell assets. >> under distress, what kind of price do they set. >> understand. the stock has been totally decimated. the equity is very difficult to trade against the bonds, i think. the longest dated bonds trading
5:20 pm
80 cents on the dollar. >> so larry mcdonald, we all know larry mac, especially when it comes to the debt market. he's very talented. this is what he said about valeant specifically. 20% of the underpriced value, only 20% is equity. the rest is debt. the curve, if you take a look at the bonds, it's nearly inverted. that is usually a strong sign of chapter 11. and the enterprise value at 20%, that's also a strong sign of chapter 11. >> what is that called in trader parlance? death spiral, right? i'm not suggesting it's there yet. but it's getting close. i do a lousy job with most things, but i think we've collectively done a good job of steering people away from this name. if you look at it today, down 14%. it never bounced today. it closed 15 cents off the low of the day on 100 million shares. typically i would say maybe that's capitulation. i don't think so. >> i thought this was worth a
5:21 pm
shot. use pete's option with defined risk to play in. you said you don't know what to do with the equity. i think you have to do it in pete's world. for me, i would have gotten stomped out, 25 was the recent low. once it breaks that, all bets are off. >> the premium has got to be really high. >> this is astronomical, quite frankly. you're waiting on an event, and the event we're waiting on right now is, can they pull them out of the spiral that guy's talking about right now, when you've got $31 billion in debt. it almost feels a little bit like the day when oil was under 30, and looking at the leverage that mackmaran. they need things to happen at valeant or the spiral goes all the way down. >> no touch in your view?
5:22 pm
>> no touch in my view. europe and japan, in the dumps. warning signs, or perhaps the next catch-up trade. we'll explain. here's what else is coming up on fast. >> stocks have soared almost 17% from their february lows. but a number of surprising names have been tumbling since then. we'll tell you the stocks, and if any are worth buying. plus -- >> you stop sending the information and start getting me some. >> all right, mr. gecko. wait until you hear about the mega merger that had traders in a tizzy today. we'll give you the name when "fast money" returns.
5:23 pm
uh, maybe we should call i.t.
5:24 pm
5:25 pm
welcome back to "fast money." a news alert on valeant. dom? >> we have it now. valeant pharmaceuticals has now formally filed its 10-q, quarterly filing. this was the regulatory filing, the financial information that was at the heart of a lot of valeant's controversy with whether or not it would trigger some default related activities or default related events given its bond holders. they had to filed this regulatory piece of information to avoid what some bond holders would have triggered as a formal default on its debt. they met the deadlines. some were in july, some in the mid-month area of july. as it turns out now, given what we heard this morning about their profit forecast, they have formally filed this. this would seem to, melissa, guys, head off that formal default type arrangement that some bond holders may have been seeking over the course of the next month. >> dom chu, thank you for that.
5:26 pm
correct me if i'm wrong, i thought this was -- >> for crying out loud, this is no -- >> i thought this was -- the lower guidance could put it in the territory where they could trigger debt covenant. >> there's also talk they actually were sort of throwing in the kitchen sink, throwing in numbers, and completely making it so the bar is easier for them to -- >> does this change your outlook at all? >> no, i think it's great. i did this trade eight minutes ago. i'm already making money on it. >> you said it was a no -- >> no, for the bonds. >> you're -- to guy's point, i'm still staying away from the stock. there's just too many uncertainties. >> let's get to gm now. shares higher today as the automaker hosts its annual shareholder meeting. phil lebeau is live in chicago with all the details. >> there was a time when this was a fairly important event in
5:27 pm
terms of how investors looked at it. today, just two cameras there, us and one other outlet. and listen, there wasn't a whole lot of news there. from mary barra, this is one of those cases they continue to post positive results at general motors, and they talked about today the importance of improving on retail sales. the most profitable sales, not doing as much in terms of the rental car fleet sales which are less profitable. as a result, gm's market share, look where it was in march, or i should say in may of this year. actually this is now year-to-date. down to 16.3%. still ahead of ford and toyota. fiat and chrysler picked up the market share. look at annual sales which right now were trending below $17.5 million for the year, being the record we set last year, the question becomes for general motors, how much lower does that market share go? and does it really matter if you're having success when it comes to retail sales? as you take a look at shares of
5:28 pm
general motors, keep in mind that this is a company that is growing its retail sales. it's up 1% this year. profit per vehicle is up. yet when you look at this stock over the last two years, guys, down more than 18%. and by the way, it was almost exactly two years ago that they announced the results of the ignition switch investigation, one of the worst days ever in gm. and if you were to told people then, they're going to have two great profitable years, the stock will likely move higher, most people would say, you're probably right. that has not been the case. >> phil lebeau, thank you. all right, so these stocks have been awful basically. >> we said it for a long time. they've seemingly done everything right. you couldn't have a better environment for the stock. the stock market's going parabolic. these guys are selling cars at record pace. yet the stock is a $30 stock, and $30 stock give or take four years ago. something's going on. i'm not going to say we nailed this one, but we have mentioned the other side of the trader
5:29 pm
names. like auto zone. i encourage you to look at what that stock has done over the same period of time. 16 times forward earnings. if you want to be in a space, that's where you go. >> ford down 3 and change. auto zone up 2.5%. chart looks the best on auto zone. i wonder if we're looking at the car companies, people throw around the term peak autos. i'm waiting on buying another car. my car is three or four years old. i'm going to wait another two or three, because i want the technology, i'm waiting for certain aspects. so it's pushed me back where i normally would have bought something new every four years. >> i understand that. is the thesis then, if you extrapolate that, that the peak auto means we're going to stabilize and plateau, or we enter another super cycle of -- >> another super cycle, but it's going to take some time. judging by the activity we've seen in the car industry.
5:30 pm
>> peak auto higher peaks? >> i think now you have more people that are going to need an automobile, but while you're hiding there, azo, they'll need stuff to fix their existing automobiles. >> whatever you buy over there. >> i'm staying away from the autos. they've not been a great trade. look at valuations, they're incredibly low. yet they can't go anywhere. because of that, i think you stay away. >> we can go to the auto parts store. we've got lights and stuff. >> what would i use those parts for? >> an air freshener. >> wait a minute. >> one of the hottest stocks in the world topped out february 16th. we'll give you the name and what it can mean for the broader market. and is a mega merger brewing in the mega merger space?
5:31 pm
every year, the amount of data your enterprise uses goes up. smart devices are up. cloud is up. analytics is up. seems like everything is up except your budget. introducing comcast business enterprise solutions. with a different kind of network that delivers the bandwidth you need without the high cost. because you can't build the business of tomorrow on the network of yesterday.
5:32 pm
5:33 pm
because you can't build the business of tomorrow ♪ "dinner!" "may i be excused?" get the new xfinity tv app and for the first time ever stream live tv, watch on demand, and download your dvr shows anywhere.
5:34 pm
welcome back to "fast money." another day, another 2016 high for stocks. the s&p 500 closing at its highest level in nearly a year. while the dow briefly crossed above 18,000 in early trade. here's what's coming up in the second half of the show. social reconstruction. twitter shares are near all-time lows. is a buyout the only way to save it? the three big names that one wall street analyst say could soon enter a bidding war. the s&p 500 is up 17% from the february low. not every stock has participated in this rally. we'll tell you which names are trading below the lows. and whether they are worth a buy now. but first, if you missed some of the recent rallies, fear not, because the next guest have a number of catch-up tries that will surprise you.
5:35 pm
todd, you're looking overseas, specifically europe and asia. >> exactly. melissa, we start off with asia. obviously the bank of japan is trying everything they can to get some growth, get some inflation going. what i want to show here is first dollar against the yen. this is a 4 x pair. in orange we'll put the dollar up top. you'll see that the dollar/yen is dropping. overlay below is blue. that's the nikkei. we'll put s for stocks. what you'll see here is the dollar is dropping, okay? you'll see the nikkei is also selling off. the two have a strong correlation. so we're looking at dollar against the yen in orange. as this orange line is dropping, the yen is strengthening. you'll see that pressures the stock market in japan, because japan is an export based economy. and also when you see currency strength in japan, that signifies deflation. that's not what the boj wants. what i see here is dollar is dropping against the yen. oops, let me go back. dollar is dropping against the yen. and that is signifying coming
5:36 pm
weakness in japan. that is not a good sign. i don't like japan. what i do like here, let me use my little eraser, is i do like germany. oops, let me go back one more. we'll leave that there. this is a better looking chart. i'm looking at the german index, the dax relative to the s&p. this is a ratio. this is showing performance of one versus the other. you can see that the ratio is starting to move higher, signifying german outperformance. that might be a little catch-up trade in germany. the next one, you can see we have a nice technical pattern which we call an inverse, head and shoulders. a little potential break out here. i got ahold of the 27 calls in ewg. i like this for the top side. that's your catch-up trade. >> todd, going back to the little circle, the line hasn't actually hit the trend line yet? >> exactly, mel.
5:37 pm
that's a great observation. i like to get in on this and traders on the dow like to be a little preemptive here. i did buy the calls. i think because we're starting to see that ratio of the dax versus the s&p start to turn up in early stages, i think we can take a preemptive strike here. europe might be in for a little bit of a rally. >> love preemptive strikes. with that said, if you look at the ewg, since 2014 high, this made a series of lower lows and higher highs. flash can speak to that. in my opinion, if you want to buy -- i would rather buy that in a breakout above 28 than flip the coin at 26 1/2. >> i like doing this in the options trade. what i'm afraid, pete can talk to this, if the market breaks out, the ball will spike up and you're paying a little more in the options market, right? >> you want to be preemptive here. he already made that statement. i agree with you, todd. he's giving the opportunity to
5:38 pm
get a little bit of relief. >> todd, thank you. todd gordon. is this a trade you would be preemptive about? >> i'm not as excited about europe. people keep pointing to the different places around the world, but i'm sticking with the good old u.s. of a. >> look, starting tomorrow, they're going to come into the marketplace. that could be a tailwind sort of trade. you can see this sort of -- i think the dax could go higher from here. i would stick with that as a short term trade. >> wall street's most unloved stocks. we'll give you the widely held names that have sat out the recent rally. is twitter about to get taken out? what one wall street analyst said should buy the beaten-down stock, after the break.
5:39 pm
the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.
5:40 pm
5:41 pm
welcome back to "fast money." the s&p is now up 17% from its february low. not every stock has participated in this rally. breaking it down is a man who never stops rallying himself, cnbc's dominic chu. >> the diamond bottom everybody called it, there were stocks, generally speaking, the vast majority of the s&p 500 traded
5:42 pm
higher since that low. about 90 some percent. 6% of the s&p 500, just a handful of stocks, have actually posted returns that are negative since the s&p 500's low back on february 11th. we broke it down and found some of the notable names as part of this very small population of stocks. first of all, you've got chipotle. we know the mess that's been going on with the eco lie scare back in the day and how the stock has performed. it's still about a percent below where the stock was back on february 11th. so perhaps no surprise there. nike, interesting one there. still 3% below where it was when the market hit the bottom on february 11th. american airlines as well. hormel is interesting. a lot of these consumer staple stocks like campbell's, hormels, hit multi-year, or record highs earlier this year, and pulled back given the run in the
5:43 pm
stocks. hormel foods, the standouts over the year, has given some of it back. now below where the market was back on february 11th. interesting look there at some of the names that perhaps have not participated and whether or not they could melissa, be due for a turn-around. maybe it's a chance to make some money, we don't know. some traders are betting these could be turn-around stories. >> a name like chipotle, that's an individual case. you've got nike, sort of like the nike complex also falls into that category. and so does american airlines, for instance. the arirlines in general have nt been doing well. >> under armour as well. downside momentum over the medium term for a name like under armour. and nike. the airlines were high flyers for a couple of years. we've talked about the traditional trade being that of the inverse oil. as oil goes up, the airlines get hit because it's such a big part
5:44 pm
of their cost basis. if you look at what's happening with oil, we know it's been going higher and we know the airline's been going lower. perhaps there's a fundamental aspect returning to the airline trade. it might be an opportunity if some traders believe that these kind of laggards over the past couple of months have some room to run to the upside. >> dom, thank you. >> you're welcome. >> dominic chu back at headquarters. >> i like american airlines. i like the airlines, actually. >> you do? >> just for a trade. i think they're underowned. i think they're on their lows. you heard the positive pricing. american airlines, i would buy it here. i would also buy nike. the other ones i would probably stay away from. >> that's a great minnesota company. >> spam, and -- >> unreal. >> processed meats. >> forget about the beginning of this year. look at that stock up until the beginning of 2016. absolutely parabolic.
5:45 pm
what happened? valuation got in the way, right? now the valuation is slowly coming back down. last quarter was good. they actually beat and raised market still turned them down 8.5%. you have to wait for the stock to get around 18 times forward earnings, and then take a look. meaning it probably trades another $2 or $3 lower from here. >> i'll play the game would you rather with myself here. >> what? >> i wouldn't touch nike. >> you do this all the time. it's not a game if you're playing by yourself. anyway, go ahead. >> it might be a better game if you're playing by yourself. under armour, up 6% in june. up 11% in july. i go there over nike. tyson over hormel. mirror images of each other. one is down 13%, tyson up 14%. american airlines, i would choose save, s-a-v-e. >> you're like a one-man show to
5:46 pm
my right. it's a three-choice would you rather. >> that's fantastic. >> i think the airlines are very difficult. i like them as well. i'm in delta, american. it reminds me of the auto trade. hormel, i agree with you, guy. that valuation got so stretched, it became very, very difficult. even with the great numbers, great results. they take it down. i think it's got a little further to go. >> twitter, another stock trading below february 11th lows. now the company is in the midst of another major management shuffle. bob peck, it could ultimately end with the sale of the company? good to see you. >> thank you for having me. >> a buyer hasn't come around at this point. what are the chances of a buyer coming around now? >> a couple of things. we think jack probably needs a good year-plus to try to turn the company around. he took over in september. probably through 2016, trying to roll the products out and get reengagement of users as well as
5:47 pm
engagement on the platform. our point today was that if you don't see that happen, we think in 2017, you would see pressure from investors to sell this asset. we do think it's a valuable asset. in our note today, we pointed to a couple of potential buyers, facebook, google, google would want to see that data in somebody else's hand. a couple of interested parties. >> the guy who left is the head of product, right? >> yeah. jeff seeberg. >> you think they need to roll out new product by the end of the year. >> correct. >> how do they do that when they're constantly replacing head of new products? >> jeff reports to a guy named adam who rolls out all the product. you don't want to see a turnover there. adam has been there since 2011 and is still running it. if the new products don't inflect the users, that's when the company has to have the share of the responsibility, revisit, maximize. >> one of the names you left off is yahoo!. what are the chances of two negatives making a positive. is there a chance that these
5:48 pm
guys get together? it makes sense on a number of different levels. >> it does. in fact, we do believe they actually -- we think twitter was kicking the tires on that. at this point, though, we don't think it's very likely. there are a lot of synergies there, though. news, finance, tech, sports. they have content drpgs. it would make a lot of sense. it makes sense that they spoke. >> here's my problem, though. i'm long the name. you and i have talked about this on air and off air. >> sure. >> why would those other brands want to bastardize their brand right now when twitter is seen as a laggard, a loser so to speak. twitter should have been instagram, twitter should have been youtube. there were so many options for twitter to really succeed, and they haven't done any of that. do any of these players really need them? why would they want to touch it? >> a couple of big synergies there, yahoo! or google could bring a billion users a month to the service.
5:49 pm
you could leverage the content that you're creating, the high-end program that you're creating over in either youtube or yahoo!. i think you would have a net series on the cost side as well. >> the price target is up 20% from here, 18 still? >> that's right. >> what's the risk/reward? >> we quantified we see a down side. today around ten times. we see an eight times multiple. which the verizon bid for yahoo! is seven times or so. >> all right. bob, thank you. >> yeah. >> bob peck. >> he doesn't have the red phone. >> well, he's here. he doesn't need a phone. >> i liked twitter at $14 when it broke to 14 originally. as it trades, thinking that somebody could come along and put some money in there. here's my issue with twitter. the investor base of the potential buyers, the facebooks of the world, googles of the word, they would be very angry
5:50 pm
if they stepped up and bought this company. they hate twitter. they don't believe in it. they don't need it. they absolutely don't. pairing it up with yahoo! yahoo! is a failing company. american airlines had the exact same play. it shows you how difficult it is in that sector. yahoo! and twitter getting together, failure and failure, i look at facebook, why does facebook -- it's a great feature. do they need it? >> google needs a social network. this is not a social network. i got a lot of heat on the show for that. >> agreed. the best realtime search engine out there period is twitter, not google. that's why you've had pressure for it before that google tried to buy twitter. >> google is probably the best suited company to buy them. but then peel back the onion and look at the current shareholders. they would not be happy with
5:51 pm
that transaction. >> they could pay 15 times to get the premium to the twitter shareholders. we quantified them that it would pay ten times. >> bob, thanks. >> thanks for having me. the names and how traders feel. ♪
5:52 pm
5:53 pm
"dinner!" "may i be excused?" get the new xfinity tv app and for the first time ever stream live tv, watch on demand,
5:54 pm
and download your dvr shows anywhere. big rumor about two consumer staples set off a flurry of options today. mike? >> we saw 18 times the average daily call volume in kellogg's. typically it trades about a thousand call options a today. most of that activity was concentrated toward the june 77 1/2 calls. and the july 77 1/2 calls. basically looking for something to happen sometime within the next 38 days. this is interesting. it only cost about 90 cents to go all the way out to july. you can spend just a little over 1% to make that bullish bet. even if you're gist looking for the stock to recapture it's high, it hit just over 80 bucks earlier this year. so if you're going to make a bullish bet, this is obviously a name that's seen a lot of speculative chatter going back
5:55 pm
about two years. they said at one point this might be a target above it. coca-cola, they saw a bunch of put buyers. that's typically what you would see. there seems to be speculation that that could be the acquirer. you would be making a bear's bet on the acquirer, and bullish bet on the potential target. >> let's play a little fast or fiction. if you take a look -- i get what's going on in the options market. in the stock market, the stocks didn't do a whole lot. it certainly didn't indicate kellogg would be a takeout target. >> this is not a -- this wouldn't be a cheap deal on an absolute price. probably close to 45, $50 billion deal, number one. this is not a cheap stock on valuation. i think it trades close to 13 times book. i see why it would make sense in theory. but i think coke would be paying an exorbitant price that would really hurt their stock. >> and why does coke want to get into the food business? >> to me, it doesn't make sense. you talk about synergy just a
5:56 pm
second ago, twitter and google and how that actually works. i don't know that this does make sense. i understand pepsi with the snacks. this is a big reach when you're talking about the kind of dollars you're going to have to pay. >> we reached out to coke regarding the rumored merger with kellogg's. they told us as usual, we do not comment on market rumor and speculation. what do you make of the rumor, mike? >> it seems a little strange. but obviously there's been a lot of chatter about acquisitions in the food business in general. and this is trading about 5% discount to the group. >> for more "options action," check out the full show at 5:30 p.m. on friday. up next, the "final trade." i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series.
5:57 pm
okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.
5:58 pm
andrea sikon. medical doctor from cleveland clinic, watson, let's review the electronic medical record of the next patient.. no problem. it's a pretty huge file. done. sorry for the wait. that was quick. as part of our research, i also compared lab results with notes about prior treatments,
5:59 pm
then cross referenced it with thousands of medical journals. and i get the benefit of much more data, and a lot more time to plan the best treatments. i stay focused 24/7 and never sleep. you sound like a lot of medical students i know. time for the "final trade." >> we have not talked about this name in a very long time. take a look at wynn, back over 100. for some reason or another even though the numbers look bad, this name is going higher. giddyap, i'm in. >> oln, a lot of people followed me in on this trade. i'm still long the trade. i believe it moves a lot higher from here. but if you have a profit, feel free to sell it. i'm staying long. >> oih, strictly for a trade.
6:00 pm
i agree with grasso. i think the service names are the ones you want to own here. >> improving margins. >> i'm melissa lee. see you back here tomorrow at 5:00. my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer! welcome to "mad money," welcome to crercramerica. other people want to make friends, i'm just trying to save you some money. my job is to not just entertain you but to educate and teach you so call me at 800-743-cnbc or tweet me @jimcramer. through all the noise, through all the nuttiness it's hard to remember exactly w


info Stream Only

Uploaded by TV Archive on