Buy Ford, Trade Zynga, Sell TriQuint

NEW YORK (TheStreet) -- In this third full week of earnings season it seems all the high-profile names including Apple (AAPL) and Facebook (FB) continue to garner the lion's share of Wall Street's attention, and with good reason.

Be that as it may, there are yet a few names, while not as dynamic, that present some opportunities for investors looking to cash in on the hysteria created by a surprising hit such as Yahoo's ( YHOO) report or a disappointing miss as we witnessed from Chipotle ( CMG).

In this article, we are going to explore the buying thesis for automotive giant Ford Motor ( F), while looking to trade Zynga ( ZNGA) and unloading shares of TriQuint ( TQNT).

While there is not an exact science to these arguments, applying comparative analysis has often proven to be highly effective tool as a predictor of performance. Of course, investor psychology has a way of throwing a wrench in these forecasts. Let's dive right into it and see if you agree.

Buy Ford

I have not been exactly sure of what to expect in Ford's current quarter. I have a good suspicion the company and its stock can only propel upward from here.

Though I am making a buy recommendation at current levels ahead of its report, which is due out Wednesday, I think it is equally important to note that my bullishness is centered on a long-term holding strategy of 12 to 24 months.

Late last month the company advised its operating loss would be three times what it reported in the first quarter, or approximately $570 million. It said this was due to weakness in Europe where profitability has become a bigger challenge than initially projected. In light of this, there were subsequent reductions in earnings per share estimates from analysts, now set at 28 cents, down from previous consensus of 35 cents.

What this tells me is that if projections have only been reduced by 7 cents due to European concerns, Wall Street is still expecting a moderate to strong quarter, particularly as it relates to U.S. sales. This makes sense because, according to recent SAAR reports, the company has consistently demonstrated an ability to gain market share in the U.S.

With that in mind, another reason to buy the stock ahead of its report is that it is now trading at exceptionally cheap levels, especially when considering its improving fundamentals and its strong cash position. At $9 the stock can easily reach $15 by year's end, offering a 66% premium above its most recent closing price and just short of the consensus price of $13.48, according to analysts that cover the company.

Trade Zynga

The fortunes of Zynga will be forever tied to the growth and popularity of social media giant Facebook, and this is not likely to change. Depending on your perspective this may be both a good and a bad thing. But as a standalone issue it is hard to see where the positives for Zynga are going to come from. That does not mean there isn't money to be made.

From a fundamental standpoint, astute investors can see that not only has the company been hemorrhaging cash, but it has performed horribly with a negative 41.57 in profit margin while producing declining annual revenue.

What's more, it seems its gamers have grown somewhat tired of what had been the company's most popular titles, many of which once contributed immensely to its revenue. So again, this is a perfect example of just how reliant it is on Facebook's growth.

Its challenge is to continue to produce hits that gamers want to play and it must continue to find a way to keep users coming back. But that in itself requires consistent capital investments that will always impact upon the company's bottom line.

In other words, its business model, as with that of Facebook, is extremely risky and that does not make Zynga a sound long-term investment, at least not until it can prove that it can grow as part of, or independent of, Facebook.

Nevertheless, that does not mean investors should not seek to capitalize on Znyga's volatility. The stock is trading considerably below its 52-week high, almost 70% lower, while also trading below the consensus estimate.

So if you consider that the average price target of the stock is $11.42, buying shares ahead of its report at $5 with the possibility of unloading the stock 40% to 60% higher on any positive news is a risk worth taking.

Sell TriQuint

Recently, I asked if chip maker TriQuint can ever be more than a derivative play on Apple. I asked this because after the stock had gained as much as 50% on the year to reach a high of $7.26, it has since lost 31% of its gains to where it now trades at $4.97. However, with each trading session and learning of more mistakes by the company's management it is clear that it will likely never be more than an Apple side bet.

For example, in the first quarter, not only did TriQuint report a decrease of 3.4% in revenue, but its earnings per share dropped 86% from the same period of a year ago. Its gross margins also arrived lower than expected. Clearly this has concerned investors considerably as TriQuint's management has not shown that it understands how to fix its problems.

Currently, the consensus Street estimate is a price target of $6.84 with a "hold" rating on the stock. But it is hard to see where the value is at this point. Even with its recent declines it still sports a P/E that is twice that of market leader  Intel ( INTC) while trading at a multiple five points higher than Texas Instrument ( TXN).

As with Zynga's reliance on Facebook, TriQuint is too dependent on Apple. The fact that Apple accounts for over a third of the company's revenue has to be a concern to investors.

From an investment standpoint, relying solely on this derivative angle absent some clear diversification remains a risky proposition, one that not only makes very little sense for investors but, even more problematic, demonstrates a lack of mobility for TriQuint.

In light of all of this, I would definitely be a seller here of TriQuint ahead of its earnings report due Wednesday after the market close. There is a chance the company might miss slightly on its revenue number, with the saving grace possibly being issuing guidance that pleases investors and that can support its inflated P/E ratio.

That said, I don't think TriQuint will do that.

At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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