A beaten-down pair worth a look

• Buy 300 shares of SunTrust Banks (STI, news, msgs) at the open.

• Buy 1,000 shares of American Eagle Outfitters (AEO, news, msgs) at the open.

Strategy Lab is MSN Money's stock-picking challenge. To learn more about the game and the contenders, click here.

One week to go and I find myself in unfamiliar territory this round -- with a gain!! This has been one of the most difficult trading environments that I can remember, in that the majority of stocks have slumped badly since the round began in February. However, there have been pockets of strength and some considerable recovery rallies.

Unfortunately, I'm afraid last week's bounce was nothing more than the start of another corrective rally. Fortunately, the rebound was led by financials as I snapped up JPMorgan Chase (JPM, news, msgs) ahead of the move. As we saw earlier in this round, these short-covering led rallies in financial related stocks can last several weeks and carry the stocks sharply higher.

Consequently, I'll add 300 shares of SunTrust Banks (STI, news, msgs) at Monday's open. The stock, trading at historically low multiples (like most of the sector), is a takeover candidate. I doubt any buyer will emerge by the time the Lab ends, but this is a dog you will want to own for the next 12 to 18 months.

I'm also going to add 1,000 shares of American Eagle Outfitters (AEO, news, msgs). If gas prices ease lower, we could very well see a play in the badly beaten-down retail sector.

This is a great company with rock-solid financials and good long-term growth prospects. The stock is ridiculously cheap right now, and even if it doesn't move over the next week, it's another great long-term play for investors seeking quality, unloved, out-of-favor dogs. Don't forget we are also entering the back-to-school shopping season, and American Eagle could very well get a little boost from that alone.

Otherwise, I'll stand pat

I'll sit on my other positions as well, even though Boyd Gaming (BYD, news, msgs) has performed horribly since I gambled on it a couple of weeks ago. News out of Las Vegas regarding traffic has been especially bad, and since Boyd focuses on that local market, it has taken a beating. However, it has good properties and is now an even more attractive takeover target. I'm tempted to double down, but that rarely works for me at the tables, so I'll refrain from doing so here.

It's been a pleasure participating in the Strategy Lab this round, and I hope one day to return. Thanks to all the folks at MSN Money and to the rest of the panel -- you've made it fun and educational, and that's not an easy combination to achieve.