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Why Zynga Will Crush 'Candy Crush Saga's' King Digital

NEW YORK (TheStreet) -- Candy Crush Saga maker King Digital may be scheduled to begin trading on the New York Stock Exchange (ICE) following an expected IPO this week, but investors may want to take advantage of Zynga's (ZNGA - Get Report) recent price dip instead.

Yes, I understand the bullish thesis for King Digital and the addictive properties of Candy Crush Saga. My wife showed me how it's played and monetizes users.

I wouldn't spend any time -- let alone money -- playing Candy Crush Saga, but my opinion of the game doesn't factor into my evaluation of King Digital as an investment.

What I see is a company with a dependency on one game for 78% of bookings and more than 70% of its daily traffic. King Digital offers a lot of games, and as we can all see, it takes only one monster hit to strike gold -- for a while at least.

Our own Antoine Gara has already written about how King Digital's IPO is riskier than it may seem and raised questions about the company's reliance on one game that could be a fad.

WATCH: King Digital Hopes Investors Level Up to Buy IPO

In my view, Zynga offers a better risk-to-reward ratio as an investment.

Interest in getting a piece of Candy Crush Saga is naturally creating comparisons between King Digital, Zynga, Glu Mobile (GLUU), and others. Many are quick to point out that King Digital is profitable while Zynga and Glu Mobile are not.

Examining a company's financials is necessary and prudent, but limiting your opinion to past financial results is akin to driving using your rearview mirror.

Zynga is in transition with a new CEO and is changing its focus toward mobile and new games. No one knows to what degree the changes will affect the share price. What we do know is that the company hasn't reported earnings per share of more than 1 cent in the last six quarters and that the share price (recently about $5.00) reflects extreme pessimism.

Pessimism is understandable, but for investors who can look past where Zynga has been and focus on where it is now and where it's headed, there is a compelling bull thesis.

Zynga has a $4 billion market cap, no material debt, more than $1 billion dollars in cash ($1.25 per share), the No. 1 play-money poker site in the world, and an online gambling license from the U.K. This is a combination for explosive profit potential, but most investors haven't figured it out yet.

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