This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

2 Stocks to Watch Because the Market Overreacted

Stocks in this article: CMG ZNGA WFM SBUX

NEW YORK ( TheStreet) -- Whole Foods Market (WFM) might be the most perfect stock in what is, by any measure, an imperfect market.

The stock just keeps on going up, with natural pullbacks -- basically buying opportunities -- here and there. But it's not just the trajectory of the stock that's incredible, it's the near-flawless execution of the business.

On Wednesday, Whole Foods announced that it beat EPS estimates, saw revenue rise by 14% year-over-year and posted same-store sales growth of 8.2% in the most recent quarter. Guidance comes in healthy and the company intends to continue full steam ahead with what is easily one of the best examples of footprint expansion in any area of retail.

The day before Whole Foods turned in a strong quarter, Panera Bread (PNRA) did the same. Starbucks (SBUX) reports Thursday. While I don't think we absolutely need to see equally-as-impressive results from Starbucks to prove the following point, it would help.

Investors overreacted to Chipotle Mexican Grill's (CMG) poor quarter. I cannot believe Chipotle's peers will continue to grow, yet its days of solid forward motion are over.

While I tend to agree with the caution TheStreet's Jim Cramer urged on his Mad Money television program Monday night, I'm not quite as down on the business.

Cramer's right, for the time being, CMG is a broken momentum stock. But, all it takes is one impressive earnings beat to regain investor faith. In other words, proceed with caution, but do not write off a company that plans to expand by about 160 locations in 2012. Chipotle has barely scratched the surface on international expansion as well as its Asian restaurant concept.

I concur with Cramer -- $270 looks like a good price for the stock. If you have the cash to support the trade selling a CMG September put somewhere in that $270 range on further weakness could make sense as a way to possibly establish a long position.

Zynga Meltdown

I'm not sure I have ever witnessed a meltdown as bad as the one Zynga (ZNGA) turned in on Wednesday afternoon.

First, I have to give a guy I have not always agreed with some credit. Richard Greenfield of BTIG Media sounded -- and please pardon my French, but there's no better way to illustrate this -- pissed off when he asked Zynga CEO Mark Pincus several questions on the conference call.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs