Henry is reunited with a woman he planned to marry in 1941; when Pearl Harbor was attacked, he enlisted in the Merchant Marines and did not see her again until now.
Henry scolds Brandon for eating several valuable stamps. After that, Punky takes him on a walk, where he is hit by a car. He is rushed to the veterinary hospital, where his prognosis is grim.
Henry purchases a video camera for his photo studio and firmly warns Punky that she is not to touch it under any circumstances. However, while he's away, she and her friends make an exercise tape and think he won't know it - until the camera breaks.
Punky catches a boy breaking into her room and stealing from her. Henry takes the boy to Fenster Hall where Mike Fulton, one of the workers there, tries to bond with him.
With Mrs. Johnson's assistance, Punky and Cherie go into the babysitting business. A woman leaves her baby with them, but when the three of them take it out for a stroll, they return home with another infant.
The children enroll in a tap dancing class taught by Jersey Janet, a former Broadway dancer. Punky is not very good, and she quits the class when her skills do not improve.
Punky has something in common with her teacher, Mike Fulton: they were both abandoned by their mothers. They work together to try and find the whereabouts of their respective families.
Punky and Cherie learn that a girl who moved into the building recently was kidnapped by her divorced father, and they are both living in the building under assumed names.
During the Christmas shopping season, Punky sees a friend shoplifting merchandise and decides to steal a present she can't afford for Henry. She regrets this when she accidentally switches bags with Mike, who ends up in prison.