tv Fast Money Halftime Report CNBC April 25, 2016 12:00pm-1:01pm EDT
change people's perceptions. >> depends how much perceptions have already been changed after their last quarter. >> yes, indeed. >> for now the perception is the dow is down 110 as we got some weakness from the get-go. let's get to "the half." welcome to "the halftime report." our top trade this hour, whether facebook, apple and amazon earnings this week can turn around the beaten-down bunch. with us for the hour today, jim leventhal, joe terranova and pete najarian. tech coming off an awful week. the question now is whether the tide is about to turn with some highly anticipated numbers about to hit the tape. steve, is it? >> we are looking at two different techs here. looking at one tech which is capx spending, intel, commodity
business, microsoft going into the cloud. this week we are looking at more of the retail channel which is apple, which expectations are so low, could very well turn and stock is dirt, dirt cheap. i'm looking at buy for the first time in a long time. linkedin is also more on the retail channel, jobs and so forth. they are two different worlds of tech. that won't matter. >> tech as an umbrella has been bad. you look at the performance last week, alphabet down six, ibm three, amazon three, hp enterprise down three as well. does this turn this week or get wor worse? >> what we are seeing, we talk about rotations all the time. maybe this is what we are seeing, rotation within tech. microsoft up 24% in the last year, google up over 30%. when you look at intel's numbers, this stock was trading in the very low, towards 30, actually right after earnings, then flipped around by the time we opened the following day after earnings. stocks moving into positive territory and holding on to some of the gains. that was a name that was beaten down. it was well off of its $34, $35
high. it seems like right now, the appetite is hey, look, we are going down for the beaten down names and the names, unless they absolutely crush it, we are going to sell some of that off, take some of the money off the table and start to reallocate somewhere else. >> is there a difference between enterprise tech and retail tech? >> consumer technology, yeah, i think there clearly is that distinction. i think what's happening right now is technology is having a lousy month, down 2% for the month and it is not contributing to the s&p 500's ability to extend through last may's high. there's two different worlds when you look at this. you look at the short term mentality, you say okay, these names are in decline right now, it is disappointing, do we want to buy them right here. what you want to do is look out six months and look at the quality businesses, look at the ones that are focusing on the digital space, on the cloud space, look at an alphabet, a microsoft and yeah, maybe in the moment you're not going to be rewarded but six months from now, i'm willing to wager that a
microsoft or alphabet is going to reward you in your portfolio. that's the right trade to put on looking forward out six months. for now, it's probably going to be a time where i moves a little sideways. >> big week. twitter, apple, ebay, facebook, linkedin and others. >> it is a big week. apple is the biggest of them coming tomorrow. the question in my mind is how conservatively did they guide at the last quarter. go back a year ago, they were beating their guidance expectations by over 25%. that dwindled to almost 0% in the fourth quarter of 2015. i think that they really went conservative in the guidance for this quarter so they could handily beat it and start propelling the stock higher. either way, the expectations for the stock and i think steve may have mentioned this, are so low that it's almost impossible for them not to beat it. >> you agree with jimmy that apple is sort of the one to watch this week? you can make the case that facebook is the one. this is a stock that has killed
it. zuckerberg has killed it. all of a sudden if you see weakness from facebook in a stock you expect to continue to be good, then what do you do? >> i think it goes back to the near term mentality. i think there is a high probability that apple and facebook could disappoint in terms of price, in terms of the business model looking forward six months, i don't know if i necessarily agree with that. yes, that leads to a short-turn rollover but let's have a distinction between quality businesses we want to own on a longer term basis and i would make the argument that facebook and apple are clearly two of those names. >> you asked me on thursday what i thought of the tech area. i don't care about this quarter. i still don't care about the quarter that just passed. if you look long term to future times, have you to keep going to the cloud. however, facebook has been the bellwether because they have continued to perform ever since the ipo came out when they didn't for the first six or nine months. >> that's the one you don't want to have roll over. >> amazon also. you want to see amazon come back with a better quarter. those are the ones i will watch. >> let me point out that i think
this speaks to the ongoing discussion we have been having about value versus growth. if you look at intel, for instance, by the way, they beat their earnings estimates for the quarter past but they disappointed on guidance going forward. the stock went up and that indicates to me that value is coming back. put that in contrast with, say, a netflix which disappointed and the stock went way down. i think when you look at apple tomorrow or facebook coming up, the responses may say more about whether value is leading technology and whether that's going to stay the case. >> if you look at stocks like that, maybe people were buying the intels and ibms, maybe because of what you said but also because of moves in the dollar and a hunt for yield and even whether the recent move in the ten-year will upset those kinds of trades down the road. >> you know, it could mean certainly intel is one that has got a dividend yield that is exciting to many. but 3%, 3.5%, not as high yielding as some utilities or consumer staple stocks we have been talking about so much. the dollar has been a backdrop
for the last 18 months. that's going to continue to hit not just the tech sector but basically anything that has an export quotient to it. certainly that includes cyclicals, manufacturing, transports, et cetera. to me, at least, this is more about value starting to outperform and it does have about three percentage points large cap value of year-to-date outperformance versus large cap growth. >> if you are looking for apple to be the savior of tech, what would give you any confidence this is the quarter, the past one, that's going to deliver? we know iphones are slowing. revenues will be a decline year over year. where you hanging your hat snnchlgts i thi. >> i think a couple things go hand in hand. one is the product refresh coming up with the iphone 7. we have to wait and see how the stock responds to earnings tomorrow. again, as i said earlier, the expectations are so darned low that it's almost -- i'm not going to say impossible. seems hard for them not to exceed expectations. if the stock responds positively, again, it speaks to
value coming back -- >> i think a lot of that is about the technicals. one thing is if you look, which names are extended. this is something i brought up at the very top. the names that are extended, those are the names that have fallen back. you look at the ibm, great example of that. the names that aren't that have underperformed, call them value if you want tosh, had been underperforming. if you look at the technicals, 50 or 200 day moving average, all of that together seems to be the case where people are making their decisions. >> what do you call apple? >> sitting right on the 50 day. i'd say that has a better chance for the upside if earnings are at least decent and guidance obviously for the next quarter is okay, that made my thinking go higher. >> let's get more on the state of tech. danny fish is portfolio manager with janis, manages the global technology fund. he's live with us from san francisco. welcome to the program. nice to have you. >> thank you, scott, for having me. >> you have been listening to this question conversaticonvers. is this the week that saves tech or makes it worse?
>> actually, if we go back to last week, and we think about what we saw, in aggregate, the composite was only down about 1% despite some of the large adverse reactions we saw out of google and microsoft. so if you look kind of beyond those names, we actually had some solid reports as well. a good example is a company by the name of service now that we own in our portfolio that is actually tied to some of the broader trends around cloud computer and software as a service and had a really nice reaction. i think you just have to be selective. >> you have apple as one of your most significant underweights. why is that? >> yeah. we do. with apple, we don't really look at it on a quarter by quarter basis. the biggest question for us is over time with the normalized growth profile the company's going to be clearly it's an inexpensive stock. what you will see is, we are
entering a period in that name where, for example, this quarter will be the first time that iphone units have been down year over year and they will likely be down significantly because we have moved from a penetration story worldwide in smartphones to a different narrative. that narrative around apple is what the business model, the normalized growth profile looks like over time as it shifts to more software and services. that's where we spend a lot of our time. we are just not entirely comfortable there yet. >> steve weiss. i have owned that for awhile also. i will buy if they miss big because stock will be down big rather than if they make it or surprise. what level would you consider buying apple or the margins on the phones too high and the uncertainty in the pipeline too much to keep you any interest at all? >> we are just -- i couldn't actually give you a level that i would buy the stock at right now. it's just we need to get more
comfortable with the longer term growth profile of the company. what i would bring you back to is if we think about last week and thinking about those reports coming into this week, microsoft and google were two really, really interesting reports and your panelists have even commented, i think what we have to keep in mind is those were really strong stocks over the last year and when you have a really good run, obviously investor expectations are very high and i think in both cases, it's an interesting example of where if you have the opportunity to look out over a reasonable time horizon, the underlying metrics, particularly in google's case, the growth was very solid in the core business, you had desktop search that grew, you had the mobile search mix continues to be a powerful part of that story, youtube continues to be a powerful part of the monetization story and we were given margin expansion so
all in all, it really lined up with our thesis there and that's one of -- it is the largest position in our fund. then on microsoft, i think just what happened, if you look through at the underlying metrics of the cloud transition elements of that business, they were fine, just albeit a little bit, maybe just a little bit softer than investors may have expected. i think where investors are struggling a little bit in the near term there is just on what the margin implications are for the business as it transitions, but all in all, i thought both reports were fine if you focused on what mattered, but investor expectations were high and hence, we had an adverse reaction in the stocks. >> sounds like to get back to apple, you are making quite a statement here. as the manager of a well-known technology fund that a lot of people may be invested in that you need to see a heck of a lot more from apple before you are willing to get involved with that stock, that you are questioning where the company is at the present time. >> we are questioning what the
long-term growth prospect is. if we can get comfortable with that, obviously we would have it higher in the portfolio. but for now it is our largest underweight. >> i appreciate the time today. thanks so much. >> no problem. thank you. >> denny fish, portfolio manager, global technology fund manager. what do you think? >> i think he points out in his defining the landscape of the second quarter but again, i'm looking forward, what is it going to be like in q4 and q1 in 2017. again, let's talk about the cash on the balance sheets in technology and the capital al vacati allocation strategies which are disappointing. buy-back for technology space looking maybe to rise 5%, 6%, maybe 7%. the other side of that is m & a spending, last year up over 100%. looking at a 40% to 50% decline. so what do they see? what is out there?
is it the political uncertainty, central bank policy that might change? what is it? they are being hesitant right now. i do believe i have confidence that that comes back at the end of the year into the first quarter. that's why a lot of high quality names you want to buy. >> best name to buy in tech right now? >> i think microsoft on this dip. it's absolutely unjustified, the sell-off there. by far, the upside is the greatest i think of all the big name techs we talk about all the time. >> i like google. i like them. >> cisco. they have been buying things that are going to propel their growth further. >> you are not worried about enterprise breakdown? >> i'm not. i'm not. you also have to realize with cisco, i will say this again, the cash. they have about $35 billion of cash against a $130 billion market cap. i like that. trades at 11 times earnings. 3.5% dividend yield. a lot to like. >> add oracle and there you go.
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whatever it is you civilians do when you're not thinking about car insurance. compare.com welcome back. valeant pharmaceuticals confirming its named joseph papa as its new chairman and ceo, succeeding michael pearson. papa is expected to join valeant by early may. over at perrigo the company named president john hendrixson to replace papa. shares up about a percent in trading so far today. back over to you. >> big news. expected, i guess. >> it's been leaked and leaked and leaked again. perrigo is down 50% from its highs. what's more interesting is what's going on in the sector. don't forget they beat off a hostile takeover by mylan. what they talk about in their release was the pressure on
generic business, right? costs keep hitting them, prices keep hitting them. i think it's problematic. you may see them get another bid. >> let's move to the financials. goldman sachs under pressure today. a note put out saying the bank has gone through a lost decade. stock up just over 1% over the past ten years. we are joined on the phone. strongly worded note. you take a shot at the ceo and c.o.o. for their high pay. you say it's been a lost decade. in what way? >> well, if you take a look at the pay to both those gentlemen, it's been half a billion dollars in the ten-year period from 2006 to the present. if you take the closing price of the stock in 2006 which was just a little shy of $200 a share, it's now down substantially from
that level in a market which is up 49%. the company has underperformed the market by 67%. if you would take a look at the basic numbers, it's pretty easy to understand why. basically, the revenues are down from where they were, the earnings are down from where they were, the core businesses have shown deterioration meaningfully trading is actually lower than it was in 2005, half of what it was in 2007. investment banking is down from 2007 but up from 2005. clearly they made the wrong decision at goldman sachs six, seven, eight, ten years ago in that they didn't see or understand how devastating the change in the financial sector would be as a result of the government intervention and they picked out the wrong side to be on. >> you could make the argument that maybe whether you make the claim that mr. blankfein or
other executives at goldman sachs may have missed the boat, you could say, could you not, that others -- who was to anticipate the kind of sort of punitive nature that the banks would operate under over the last many years and just the way the industry itself has been restructured just looks differently and is operating in a more prohibitive environment certainly from a regulatory standpoint. what does that count for? >> i'm glad you said that. i'm glad you asked that question. because in 2005, jpmorgan did $5.9 billion in trading. in 2015, they did $10.0 -- $10.1 billion in trading. they doubled the size of their business almost in this ten-year period. that was the highest level of trading revenue that jpmorgan has ever had. so not everybody missed the boat. not everybody didn't understand
that dramatic changes had to be made. in the case of citigroup, you knocked off 26% or roughly $1 trillion worth of their assets. in the case of bank of america, you have gone through this massive restructuring of the business. in the case of wells fargo, you have doubled the size of the company because of the acquisition of wachovia. in the case of morgan stanley you are doing as much in trading almost in 2015 as you did at the peak. so yeah, other companies went through the same process that goldman sachs did but not one of them stood its ground the way goldman did and not one of them refused to do transformational changes which would have ameliorated the blow. you can't protect goldman sachs by saying everybody else was wrong and therefore the fact they were wrong didn't matter. they were wrong uniquely as a result of their own decision making and they performed
incredibly poorly for the shareholder over a ten year period. >> i have a panel of folks in front of me who are jumping out of their seats to get in on this conversation. >> dick, your criticism is based on price performance, i believe, of goldman sachs. now you are talking about the business models of a jpmorgan or citi over the last ten years. how does goldman sachs' equity price performance compare to its peers over the last ten years? is there a clear distinction that goldman sachs has dramatically underperformed the rest of the investment banking group? >> well, in terms of investment banking, goldman sachs has held its own. in trading -- >> no, no, the actual price of the equity, deick? >> i did not take a look at the price of all of these stocks. let's assume that -- >> can i help you here? >> go ahead, dick. >> let's assume you're right and i don't think you are, but i
think jpmorgan's stock is up considerably. the point is even if you are right, that doesn't mean to say that they made the right decisions. if everybody in the room makes the wrong decision, you can't say gee, these guys are fine because they made the wrong decision along with the crowd. you're not paying management to make wrong decisions along with the crowd. you're paying management half a billion dollars in the case of these two guys to make the right decisions and they didn't. they did not understand that the banking industry would be nationalized. they did not understand what the deleveraging of the industry would mean. they did not understand that trading would be meaningfully impacted negatively as a result of the regulations put in place by the government. and they did not react once these things began. the net result is they did not work for the shareholder. >> i think you are selectively calling out facts. if you take a look at the stock price and ultimately that's what we care about, the stock price and you know this, i'm surprised
you would say -- or you should know as the analyst, take a look at where morgan stanley was. you cite morgan stanley. that peaked at $85. now it's below $30. you did point out how the stock fared versus the s&p. that's not the barometer. actually, if you take a look at citi, another one you bring up, that's down from 550 to 50. i think they have done a phenomenal job managing an incredibly tough environment nobody sauce comiw coming and b way, two of thaeir competitors went out of business. you are not paying appropriate attention to what they have navigated through. there are no two guys i would rather have running a company than these two guys. >> the bottom line is if the whole concept is to lose money because everybody else is losing money, then you're right. >> that's not what i'm saying. >> it is what you're saying. >> no. i'm saying as a shareholder -- >> you think because these companies lost money, just
because the shares of these other stocks went down, it's all right for this one. >> i'm using your barometer. >> jpmorgan -- >> what the fundamentals are. >> you are not using my barometer. >> jpmorgan is a different company. a much different company. >> jpmorgan showed a significant increase. that's the whole point. goldman sachs should be a much different company but it is not. in other words, the whole process of saying hey, you can lose all the money you want in the stock because basically, other people have lost money in similar stocks. but other people have not lost money in financial companies. this is considered to be one of the top six, if you will, companies in the industry along with jpmorgan, where you didn't lose money. you made mon. >> dick, i have to run. lastly, you say that they should have made a transformational change. those are your words. what should that change be today? >> well, i think it's pretty clear that if the company wants to continue to double down on
trading, that may not be the right place to put -- remember, they raised $38.5 billion and doubled down on businesses that were declining in size. i think that the area where you are going to find upside is in two places. number one, you are going to find it in investment banking which i think has a very bright and very strong future. number two, in traditional banking. remember, traditional banking saw in the quarter that just ended and for the last few years loans go up, deposits go up and marge ins go up. the net effect is the traditional banking company is doing better. morgan stanley has positioned itself to benefit from that. obviously you have the other four of the big six that are positioned to benefit in that sector. goldman is not. >> dick bove we leave it there. thanks for calling in. coming up, u.s. car makers are losing market share to chinese competitors in the
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china, the world's largest auto market, was dominated by u.s. auto makers. now, though, they are losing the fight. question is, can they make a comeback? phil lebeau joins us live from beijing. >> reporter: we are about to tell you about winners and losers over here in a market where sales are still up year over year, little over 6%, hard to say anybody's an outright loser. but there are some distinct winners here. you mentioned the pressure the u.s. auto makers are feeling. that doesn't take away from the fact that general motors continues to be one of the winners in this market. it's doing very well here. earned about $518 million in the first quarter, on pace to earn over $2 billion here this year, pushing those higher end suvs in addition to the buick models. mercedes, another automaker that's winning here. it is now the largest luxury automaker in china and it
continues to pick up share from some of its competitors. finally, the chinese auto makers, we are talking about brands that we are not familiar with in the united states because we don't hear about them, they are not on sale there, but over here, pushing lower priced suvs has been a winning formula. that's where they are taking market share from the big three or four competitors selling suvs in this country. which auto makers are losing? it's hard to say anybody is an outright loser but volkswagen no doubt is feeling pressure. the brand is under pressure worldwide and volkswagen has never really done well pushing suvs in any market. that's what's hot here right now. that's why volkswagen is relative to its peers struggling a little bit. what about tesla? i get this question all the time. is tesla a big player in china. it's not a big player yet. it's hard to call tesla a winner or loser. last year they sold about 3500 electric vehicles here. as we have been driving around beijing we have seen more than a few tesla model ss driving around. the real question is, does tesla
at some point put an assembly plant in this country because if are you not manufacturing here, it's tough to get high sales because of the taxes that are slapped on imported vehicles. guys, that's the taste of the winners and losers in the world's largest auto market. >> interesting stuff. good stuff at that. phil, thanks so much. phil lebeau in beijing. one hedge fund manager doubling down in his bets against china. kyle bass is launching a new china opportunities fund, according to a note to investors i have seen, the fund will take advantage of non-performing loans and currency devaluations. the fund will also have an initial closing on july 1st. mr. bass will detail his thesis in a webcast to investors this week. the note says recent events quote, represent what we believe to be the beginning of the unraveling of the chinese credit system. i would love your thoughts on this. not maybe a new point of view, obviously, for kyle bass being negative on what's taking place
in china, but the fact of raising a new fund to try and capitalize on some of what they see as a weakness. >> listen, i'm a big fan of kyle bass. he obviously was very accurate in a lot of his assessment of the economy and the housing market, '06, '07 that. being said, i'm not necessarily sure this type of product would be of interest to me. liquidity would be a concern. lockup, which you would know more about than me, putting your money into this, what's your time frame of your ability to get it out if you want to. this isn't the type of strategy i would align investments with. >> i reached out to mr. bass directly and haven't heard back. steve? >> i think there's clearly a bubble in china. the growth of their debt level is unprecedented. rivals in the u.s. but they did it in a record amount of time. part of the problem is owned by the government, meaning they own the banks, but the problem is
betting on it when you don't get reliable information, number two, lockup. number three, it's not a new trade. there's another fund out there that i looked at so look, i do think they deval at some point. i would have thought they did it already. i'm not sure how to play it. >> i think there's still enough of a question as to whether there will be a soft or hard landing on the economy in china. you had year over year growth numbers, gdp at 6.3%, quarter over quarter indicated something lower. if it's 6.3, that's enough strength that betting against china is not a slam dunk. still, there's questions as to these official figures. >> it's all about liquidity. if you are going to do this, the easiest way is not get yourself involved over there so you get involved through the u.s. companies you know have direct and very extreme exposure towards those markets. that's your best way to play this. >> coming up, exxon, chevron, bp, hess all report this week. with crude making a comeback,
could the names surprise to the upside? are they buys right now? gas prices jumping more than 4% the past two weeks. how much pain could we see at the pump this sner? that's just ahead. r, but are you gonna bring up that stock again? well you need to think about selling some of it. my dad gave me those shares, you know. he ran that company. i get it. but you know i think you own too much. gotta manage your risk. and you've gotta switch to decaf. an honest opinion, even if you disagree. with 13,000 financial advisors, it's how edward jones makes sense of investing.
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welcome back. sue herera now with the latest headlines for us. >> here's what's happening at this hour. afghan's president calling on pakistan to battle the taliban rather than to try and bring them into the peace talks. the remarks made during an address to the afghan parliament, just april week after a taliban assault on kabul killed 64 and wounded 340 others. a u.s. appeals court restoring the four-game defla deflate-gate suspension of new england quarterback tom brady, reversing a federal judge's ruling in september, saying it is not the court's job to second-guess nfl commissioner roger goodell's ruling. salmonella concerns prompted cvs pharmacy to recall gold emblem herbal tea sold nationwide. those recalls have a single best by date of march 18, 2018. as part of a series of economic reforms, saudi arabia says a portion of the world's
largest oil company, up to 5%, will go public. it values the company at more than $2 trillion. apple is the most valuable publicly traded company with a market capitalization of about $585 billion. that's the news update this hour. back to you. the consequence of record low oil prices. >> an interesting story to end on there, steve, you know this company well. >> yeah. it's very interesting. of course, that's saudi national oil company. it is pretty valuable. the question is how much disclosure are they going to give and where will they list it. from what i heard, they will only list it in saudi arabia. so disclosures won't have to be what they would be if you list in the u.s. and other developed markets. so $2 trillion? that's kind of aggressive. you don't know if they will make money or not. >> take a look at the energy companies that trade this week. a report this week, i should better say, good ones out there to discuss. there's the screen right there.
bp, baker hughes, hess, conaco, exxon, phillips 66. >> that's the one refiner name that's performed well year to date. you could find some opportunities. obviously the majors are coming. overall it will be pretty negative when you look at the earnings and conversation about what the guidance will be as well. >> i agree on the refiners. you are starting to see gasoline demand really pick up in advance of the summer season. more than historical trends. i actually prefer marathon to phillips 66. just the geographical location of refineries. as to the enps, i'm negative because i don't believe the rally is going to list. there's still a lot of oil above ground in storage. >> i'm looking at conacophillips, i have been in it for a long time. as oil starts to drift a little lower, if you think oil will start drifting, i think you got to take that trade off. you can stick with exxon.
i continue to hold on. >> you like that they did the dividend hit when they did. >> they made the tough decisions nobody else wanted to make and everybody else says they won't cut their dividends. they included, then ended up doing it, got penalized right away. look at that graphic. look at the reaction with them between them, chevron and exxon. it says it all. >> a day later it's gone up. >> such a different inflection point right now because these stocks and crude have rallied 50%. now it's a different decision in terms of what they are making going to the future. people didn't care about the fundamentals before. now they care. >> i own marathon. however, the seasonal trade generally ends around may. that's when you look to sell. yields are good, nobody cut the yields of meaning. i still think it's a great buy. >> gasoline prices up 8 cents over the past couple weeks. jackie deangelis with futures. >> good afternoon.
that's right. gasoline futures hitting a year to day high last week, up 70% from their february lows now. so the survey saying we are up eight cents, how much more can we go up at the pump? >> i think we got a good indication on friday when we traded at 155.5, then rejected that level. if we go above that, we can head to the 170 level. approximately about 10% higher than here. i will mention, too, we can say up 70% and it sounds like a huge deal but that up 70% was from extremely depressed levels. if you talk to the average consumer, they would be more conscious of the huge plunge in a year and a half than they are the 70% rise. >> your take, with summer driving season just getting into gear here and the demand being quite high, what are the levels you're watching? >> well, when you are watching some of these levels, the up trend that's been continuing, look for support at the 145 level.
anywhere below 150, i would be a buyer of the gas futures, particularly if you go to june and look at that contract. close above 155 and i think we go up to 170. demand is huge in the u.s. actually, the highest in eight years. certainly, there is demand coming. it's just a question of supply, will the supply slow down. oil rig counts have been falling, not fast enough. if they continue to fall and we get that continued demand in the u.s., certainly gas can go higher. watch the support trend line if we break there, all bets are off. right now, it's up and away. >> for more on the futures market, head to futurenow.cnbc.com. we'll be back with a live show 1:00 p.m. eastern tomorrow. >> thanks so much. coming up, after more than a year on the sidelines, one analyst getting bullish on elle brands saying it's cheap after this year's drop. you add it to your shopping list? that's the question. here's the s&p sector heat map. back after this.
to go there or bed, bad & beyond for that matter? i don't see the top line growing for this company any faster than population growth overall. that is the low single digits. it's hard to get enthusiastic about this stock. i just don't see the growth. i'll also point out that analyst here upgraded the stock so i find that a diskeblgt. -- disconnect. that hotel stock could rally 30%
♪ no, you're not gonna watch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. you might have missed it. a bull case for marriott. calling for 30% upside in the hotel company over the next year and a half. what do our experts think about that you? buying? >> i don't.
i'm not selling the stock short. here's the thing. they make a good case here or try to make a good case that stock is recessionproof because they don't own the hotels. they simply franchise them out. my point on that, i'm a little worried about the economy. >> you go to our documentary like five years ago. i hope the street is not just waking up to that. >> that would seem to be -- >> that would be the center part of the crux of the article here. and my point is that in a recession, you'll find that operators go out of business and the franchise goes away with them. i don't really think this is going to go anywhere. and the buildings that they were competing against, hilton gardens and smaller hotels have been repurposed, rezinld. however, it's a good management. they're making acquisition. the earnings growth will support $100 price stock. i don't think it's a big deal the call. i think that is natural evolution of things. if you've oenld the stock over
time, the last five, ten years, it's always gone up. >> i vnd heard anybody talk about the starwood deal. >> i like that starwood deal. that is a transaction that's going to grow them into a best of breed first class organization. i think looking forward, let's not forget the contribution from ritz carlton. this note talks about net income transitioning right into free cash flow. i like that from a fundamental stand point. clearly in the lodging space, this is the best in breed, j.p. morgan, so to speak. >> the only issue is in this space, none of the stocks are mostly all -- have not done well at all. >> right. >> marriott over six months is down 11.a% and over the year, 18 1/2%. >> the thesis may work. joe may think it's best in breed case. >> right. >> why hasn't the best in breed stock lived up to the best in breed billing? >> this is one of the sectors they rotated out of. i think this is the opportunity going forward. you talk about the synergies. bring up starwood and free cash flow.
this company generates and does an extremely impressive job with that, scott. so for all the reasons that it's been sold off, it means even more so that i think there is upside. i don't know if it's 30%, jimmy. i think there is far more upside in front of it now. >> barons likes to go big. >> right. it makes sense to sell. >> you got to make a big call. >> it's marriott. >> 24-stock in 2011. 84 the peak in 2015. $66 today. i could see it going right back to $84 again. >> all right, coming up, pete has unusual activity, bullish activity that in a discount retailer. we're going to talk about that trade coming up. ♪jake reese, "day to feel alive"♪
♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ (speaking japanese) oh watson, your japanese is very good. thank you. (speaking japanese) exactly. i can understand nuance, context and idiom in seven languages to help companies all over the world with everything from retail solutions, to banking, to cyber security. (speaking japanese)
we talked a lot about energy today. we're going to do that with jeff currie tomorrow at noon eastern, going to get liz take on where he thinks oil and the rest of the commodity spectrum is going. let's get to unusual activity right now. >> i'm looking out and seeing dollar tree. this is a very interesting stock. they are taking profits off the table. they were way out in august. the 77 1/2 calls are being sold today and those are being rolled a little bit closer. they're coming to the june 80 calls, looking for this thing to get a better reaction from this $80 level. something you want to keep an eye on. i've been trying to bid all day long. i'm not in this right now. i'm trying to get in there. i'd like to get in there before the end of the day. as of right now, i have no
position. >> let's do rapid fire throughout earnings coming out for the week. a lot of names. you saw the calendar was full. 3m? who wants it? >> industrials. industrials done relatively well. i would expect 3m to do well as well. >> the so-called stocks that people didn't want, now that they have wanted, it's helped the rally. >> no doubt. >> eli lilly? >> that's a big one. we'll see what pricing is doing. the stock is the most expensive drug stock out. there i want to hear what they talk about in terms of the election going forward on pressure and pricing. >> all right. twitter? >> we talked about -- we book end it here at the end with twitter. >> is this a turn around? >> i don't know. >> i don't see it. >> you tell me. >> i don't see it. i still don't see the strategy looking forward. >> anybody else have a take on twitter? no one bullish? >> i agree. there is no valuation. >> bristol-myers? >> large cap pharmas have been coming back. not just bristol-myers but pfizer and merck.
all of them are coming back right now. >> you own it? >> i do. i own bristol and pfizer and calls in eli lilly. i like this sector. i know the ibb is one i'm still more concerned about, the biotech world. we know the political landscape. >> i love politics. >> i love those names as well. >> we got a lot of biotech reporting next week also. we have amgen, gilead, cell g. i think the sector is looking g some growth money from tech is going into biotech. >> all right. dunkin' brands? >> where's josh? >> we're going to talk to him. i should have held up -- >> the food correspondent to come in here. it's a coin toss. >> vf corp. >> yes. >> i think that will be a good one. juniper? already gave you an idea it wasn't going to be announced. >> everybody kind of wondering,
okay, enterprise, what is going on? >> you have to talk about cisco. the question is if cisco is eating juniper's lunch. >> i think pete and i would agree that cisco is. >> all right g stuff. i'll see you tomorrow. thanks for watching. "power lunch" begins right now. >> welcome to "power lunch," everybody. we have literally a world chock full of news on this monday. cnbc's phil lebeau live in china where a big auto show is kicking off in beijing. cnbc's hadley gamble standing by in saudi arabia where big economic changes are coming to that country, ready or not. and president obama in germany meeting with that country's leaders. all this as fighting escalates in se syria. we're covering all the headlines for you over the next two hours. we start with another big international story, also out of china that could impact all of you apple