'Fast Money' traders share their stock 'shopping lists'

Key Concepts

• Market Pullback: A general decline in stock prices across the market.
• Shopping List: A list of stocks that traders believe present buying opportunities during a market downturn.
• Beta: A measure of a stock's volatility in relation to the overall market. Lower beta indicates less volatility.
• Data Center Upside Play: An investment strategy focused on companies that benefit from the growth of data centers.
• Regulated Utility: A company operating in a sector (like power) that is subject to government regulation.
• Independent Unregulated Power Producer: A company that generates and sells electricity without significant government regulation.
• Capex Expenditures: Capital expenditures, which are funds used by a company to acquire, upgrade, and maintain physical assets like property, buildings, and equipment.
• Tariffs: Taxes or duties to be paid on a particular class of imports or exports.
• Dividend Yield: The ratio of a company's annual dividend per share to its market price per share, expressed as a percentage.
• Collars: An options strategy that involves buying and selling options to limit potential losses and gains.
• Selling the Put: An options strategy where a trader sells a put option, betting that the underlying asset's price will not fall below the strike price. This is a bullish strategy.
• Multiples: Valuation ratios, such as the price-to-earnings (P/E) ratio, used to assess a company's stock value.
• AI (Artificial Intelligence): The simulation of human intelligence processes by machines, especially computer systems.
• Froth: Excessive speculation or inflated prices in a market.

Stock Picks During Market Pullback

This discussion focuses on identifying investment opportunities amidst a broad market pullback. Traders share their "shopping lists" of stocks they believe are attractive buys.

Steve's Pick: Boeing (BA)

• Rationale: Steve re-entered a long position in Boeing, having previously owned it years ago. He bought more yesterday just before the sell-off, acknowledging the "terrible timing."
• Positive Catalysts:
  • No Criminal Charges: The Department of Justice (DOJ) throwing out criminal charges is seen as a significant positive catalyst.
  • Ramping Up Production: Increased production of the 737 Max and Dreamliner models.
  • Return to Free Cash Flow: Expectation of the company returning to generating free cash flow.
  • Duopoly Market: Boeing operates in a duopoly market (alongside Airbus), which provides a structural advantage.
• Current Action: Bought more shares today, hoping for higher prices soon.

Bono's Pick: A (Utility Company)

• Rationale: Bono took the assignment literally and identified a name he currently owns and would readily add to: a regulated utility company.
• Key Features:
  • Lower Beta: Offers a step down in beta, appealing to investors seeking less volatility.
  • Data Center Upside: Provides exposure to the growth in data centers due to its market presence.
  • Strategic Markets: Operates in Virginia, Texas, and Ohio, which are identified as "epicenters" of data center buildouts.
  • Infrastructure Investment: The company's capital expenditures (capex) into infrastructure allow it to earn at potentially increasing rates.
  • Regulated Utility Structure: While offering data center upside, it remains a regulated utility, not an independent unregulated power producer, implying a more stable, less volatile business model.
  • Tariff Benefits (Ohio Example): Negotiated tariffs in Ohio hold large power consumers accountable for making up the difference, ensuring affordable rates for individual consumers.
• Performance: The stock has had a "nice run year to date" and offers a "3% dividend yield."

Karen's Picks: Meta (META) and Dell (DELL)

• Strategy: Karen's approach involves "lifting the put side" on existing positions, which is equivalent to "getting longer." This is done through options strategies like collars.
• Dell (DELL):
  • Valuation: Multiples have come down, and the stock has fallen significantly from its peak (around $22). Karen believes the current multiple is "not demanding."
  • AI Play: Seen as a way to play the AI trend, especially if issues at competitors like Super Micro benefit Dell.
  • Industry Concerns: Hopes that any issues at Super Micro are specific to that company and not indicative of a broader industry-wide problem.
• Meta (META):
  • Valuation: Trades at approximately 21 times earnings. While previously able to back out cash, the cash is now less than the debt, making that calculation impossible.
  • "Cheap" Multiple: Despite the valuation nuance, Karen still considers the multiple "cheap" given how much the stock has been hit.

Tim's Pick: Gold Miners

• Context: Tim acknowledges that he was also a buyer of Meta on the pullback, but his assigned pick for the exercise is gold miners.
• Market Observation: Notes that Meta is down almost 15% in the last month, and gold miners are down 14%.
• Gold Price Trend: The uptrend in gold (the metal) from February 24th remains intact, even with potential downside to $3500.
• Analyst Sentiment: Believes analysts are relieved by the pullback in gold, allowing them to upgrade gold miners.
• Underlying Thesis: "Nothing has changed in the backdrop for this story other than you've taken the word of the day, froth, out of that gold market." The core reasons for investing in gold miners remain, and the recent pullback has removed speculative excess.

Synthesis and Conclusion

The discussion highlights a consensus among traders that the recent market pullback has created buying opportunities in specific sectors and individual stocks. Key themes include:

• Catalyst-Driven Buys: Boeing's selection is heavily influenced by the DOJ's decision to drop criminal charges, alongside operational improvements.
• Defensive Growth: Bono's pick of a regulated utility demonstrates a strategy of seeking growth (data centers) within a more stable, less volatile framework.
• Value in Tech: Meta and Dell are identified as potentially undervalued tech stocks that have experienced significant price declines, offering a chance to buy at lower multiples, particularly in the context of AI.
• Commodity Re-evaluation: Gold miners are presented as an attractive option due to a recent pullback that has removed speculative "froth" from the market, while the underlying positive macro backdrop for gold remains.

The traders are actively looking to capitalize on market weakness, employing various strategies from fundamental catalysts to valuation opportunities and sector-specific trends.