This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

2 Stocks to Buy on Weakness

NEW YORK ( TheStreet) -- While I dislike most low-priced cult stocks, I absolutely adore misunderstood stocks. When they experience weakness, the words "buy on the dip" become more than just a mindless tout.

Consider Zynga (ZNGA - Get Report).

On Tuesday -- and for the second time in recent weeks -- the stock sold off hard. This time investors unloaded shares after Zynga made several announcements at its "Unleashed" event.

Zynga intends to make its games more social and accessible across devices and, maybe most importantly, away from the Facebook (FB - Get Report) platform that catalyzed its success. For a complete summary of what Zynga announced at "Unleashed," see this recap by TheStreet's Nathalie Pierrepont.

Just like the one that took ZNGA below $5.00 earlier this month, this selloff is overdone.

After hitting an all-time low of $4.78 on June 12, ZNGA rebounded to trade as high as $6.16 on the 25. That's about 29% worth of upside. I saw that coming and added to my position aggressively under $5.00 and a bit more just above that. My cost basis now stands at $5.57. The stock retreated all the way back to $5.77 at Tuesday's close. That's absurd.

Because I took advantage of the earlier weakness, I will most likely just stand pat with what I've got. That said, this selloff could represent another buying opportunity. There's no doubt about it if it intensifies. And, if we see sub-$5 again, ZNGA, yet again, becomes a screaming buy.

Many investors, and CNBC's Bill Griffith illustrates this, simply cannot wrap their heads around the type of business model companies like Zynga and CEOs like Mark Pincus employ. In a CNBC interview, Griffith railed Pincus about his company's stock price. Pincus, who comes off as a tad socially awkward, did a less-than-stellar job responding.

But, at day's end, Pincus could have pulled Ph.D.-level rhetorical speaking skills from his back pocket and Griffith still would not have understood.

I'll pull the great wordsmith Haruki Murakami from my back pocket and simply say, "If you can't understand it without an explanation, you can't understand it with an explanation".
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMZN $675.71 11.00%
FB $116.73 7.20%
P $9.44 -0.11%
YHOO $36.59 -0.97%
ZNGA $2.40 -1.23%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs