Is there a computer chip revolution underway? Big mergers on the horizon for Big Pharma and more…

The PC Revolution Trade

Microsoft and Intel are trying to reinvent the PC with Vista and new chip technology. On the phone is Paul Otellini, CEO of INTC. He is very optimistic about Microsoft’s Vista O/S, says that it is optimized to take advantage of new Intel processors. Most industry analysts are saying that PC sales will grow in the double digits in 2007 and he agrees with that outlook. Intel’s new chips put it “a year ahead” of the competition; very energy efficient, fast and small. The new “Penrym” processors will come out later this year.

Macke: INTC is back in the saddle in the battle against AMD. They can easily outspend AMD and are hitting on all cylinders right now. BUY INTC.

Strazzini: AMD is forced to concede on pricing and they are really in trouble. You’ll see AMD’s stock at $10 by the end of 2007. Also adds however that INTC’s new chip announcement isn’t really as big as it’s being made out to be by the media.

Bolling: WFR has a great-looking chart and they crushed earnings. There is a big demand for their wafers that go in processors.

Pharma Trade Revival?

4Q Earnings come in for MRK tomorrow. Mike Huckman, CNBC Pharma Specialist says that the market is putting a lot of credence in BMY because they are a likely takeout target. Big Pharma has to start consolidating for the following reasons:

1) A dearth of new products
2) Tens of Billions of dollars of drugs are going generic
3) Squeezed profit margins
4) Medical schools and doctors are sick of pharma sales people in their offices

Adami: JNJ is a BUY.

Strazzini: The problem with MRK is that if the company doesn’t buy somebody soon, the stock will go down.

Macke: Stay out of the Pharma sector and stay away from MRK–it’s a roulette game at this point.

Buy Oil or Not?

Bolling: Waves of selling in oil today on news that the Saudis want oil prices lower. Had to sell positions in oil, get out! ALWAYS sell before your losses get too big.

Altria Trade

Altria will report earnings tomorrow and discuss their possible breakup.

Adami: I love Altria. BUY MO. This stock is headed to $100.

Strazzini: MO not a good buy because they sell cigarettes, not considered ethical by many investors and funds.

Macke: Ethics are irrelevant, MO is a great stock. BUY MO.

Strazzini: The stock will be sold off on breakup news, watch out!

Nuclear Energy Trade

Jerry Grandey, CEO of CCJ on the phone. CCJ is a uranium mining and energy company. He says that demand for uranium has been growing at about 2% a year, but they see that picking up dramatically thanks to rising demand in US and China. Long-term contracts forced CCJ to sell uranium at below market prices in the recent past, but a new contract cycle is going to allow them to get higher prices more in tune with the market. They are in the process of getting their Cigar Lakes mine up and running, but it is still years out.

Bolling: The world will soon start accepting uranium and this should drive prices up. BUY:

DUK, USU and CCJ.

Playing Merger Mania

Adami: The brokers are the winners in 2007. MS and GS are BUYS. M&A activity up 32% over last year already.

Strazzini: Brokers will go higher this year, but not a lot of new money going into the stocks. MER is a BUY.

Also BUYS are:

T and VZ.

You might consider selling S.

Macke: Own MAT, good growth in their Barbie division; beating the crap out of Bratz dolls. Not Fast Money, but a good solid long term buy.

Bolling: Steel is still looking good. MT, ATI and AKS are good. Buy on the dips.

>>Happy 52-week High to KNOT<<

Scott in CA– Sub-prime mortgage lenders have cratered, is this a bottom yet?

Strazzini: Lots of bad news still to come for this space. You can buy NEW, but be prepared for a rocky ride, as there will be lots of bad news in the future.

Jean in ME– What’s up with GYMB?

Macke: Don’t buy GYMB just yet. Not sure how they did for Xmas sales. Hold off until same store sales numbers come out but keep your money out for now.

Eliecer in NY– WHat are the best alternative energy stocks?

Bolling: No good viable alternative enegry play, but ETR looks good.

Mike in FL– What’s the long-term prospects for FXI?

Adami: FXI is fine UNLESS it closes below $101.

Media War

Strazzini: It’s all about distribution. Comcast and AT&T own that. CMCSA is the best media pure play, definitely a BUY.

Bolling: I love CMCSA. BUY this stock.

Adami: Comcast is firing on all cylinders, BUY it.

Macke: CMCSA is trapped in it’s markets, and expansion is a problem for them.

Bolling: If you want, you can spread your money over CMCSA and DISH.

Macke: just wait to see how AppleTV does.

FINAL TRADE:

Bolling: BSX is a BUY.

Adami: XOM is a BUY.

Strazzini: KR is a BUY.

Macke: INTC is a BUY.

See you tomorrow!

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