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Sell Infosys, Buy Intel and Yahoo!

Stocks in this article: AA INFY IBM ACN INTC QCOM YHOO

The Street will be looking for 37 cents in earnings per share on revenue of $12.8 billion. Earnings are expected to fall almost 8%, while revenue is seen rising less than 2%. Given the deficits Intel is working to overcome, expectations have come down over the past several quarters. Essentially, no one is expecting a miracle.

What investors want to see are signs that the worst is over. Aside from beating revenue and earnings estimates, management will need to guide with more confidence that business conditions are expected to improve.

In that regard, management has laid out plans to grow the chip business in emerging markets and reinvesting cash flow into research and development. Until Intel shows that it has taken a drastic step backward, the stock remains a buy and management deserves more time.

Finally, we have Yahoo! (YHOO), which also reports first-quarter earnings Tuesday. With constant news surround a possible IPO for Alibaba, in which Yahoo! owns 24% stake, investors sometime forget that Yahoo! still has strong businesses that CEO Marissa Mayer is working to grow.

There are questions with the company's direction. Investors are not sure if Yahoo! wants to be strictly a media company that focuses on content delivery or a technology company with an innovative strategy. Although Yahoo! continues to be misunderstood, Marissa Mayer has a strong grasp of what Yahoo! needs to move forward. On Tuesday, she's certain to be pressed for details.

The Street will be looking for 37 cents in earnings per share on revenue of $1 billion. According to some estimates, both figures are expected to be flat on a year-over-year basis. But don't mistake this for a disappointment. Yahoo! is still in the early stages of its rebirth under Mayer.

Given the 15% decline the stock has suffered in recent weeks, I see this as a strong buying opportunity. Yahoo! still has the ability to post growth in key areas like online advertising and mobile monetization. The current stock price assumes Mayer won't figure it out. But with strong assets like its Finance and Sports businesses, which Mayer can use to become more aggressive, this is the wrong bet to place.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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