Buy Intel, Yahoo! and Alcoa; Sell Infosys

NEW YORK (TheStreet) -- Earnings season for the second quarter officially kicked off when aluminum giant Alcoa (AA) stepped up to the plate last week and reminded investors of just how committed it is about turning its fortunes around and returning value to shareholders.

The same can't be said about Infosys (INFY), which disappointed analysts with a miss. On Tuesday, two tech titans in Intel (INTC) and Yahoo! (YHOO) will either affirm their rebounding potential or what many believe to be their continued path toward obscurity.

Reason to Buy Alcoa

If you are not a fan of mixing sports references, allow me to apologize now. Alcoa, although did not hit a home run during its report, certainly did not fumble the ball as many continue to suggest. In fact, the company did better than held its own under what continues to be a very challenging environment for all within the aluminum business.

Top 3 Internet Stocks For The Second Quarter >>

Although the company reported no EPS for the quarter, Alcoa generated revenue of $5.963 billion. The company did however log 6 cents EPS excluding special items -- topping analyst estimates of 5 cents per share. It is clear that it is still feeling the effects of double-digit annual declines in aluminum prices -- a concern that has hurt not only its gross margins but also its operating earnings, which fell by 7 points and 77% respectively.

Be that as it may, Alcoa deserves a considerable amount of credit for continuing to make the best out of a bad situation -- particularly by focusing on its downstream business, where it showed a considerable amount of improvement. From an investment perspective, I see Alcoa's shares as being severely discounted to its true potential by at least 20% over the next six to 12 months.

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