J.C. Penney (JCP) Stock | A Trade for Contrarians?


J.C. Penney Company, Inc. (NYSE: JCP)

JCP operates a chain of mid ranged American Department Stores covering some 49 states. The popular brand is known for conventional merchandise as well as the sub let retailers covering everything from coffee to jewellery. In essence, JCP is a one-stop shop for retail. In recent years the stock has had some misfortune. However, the recent appointment of a new CEO coupled with a refocus on fundamentals has seen a lot of commentators enthusiastic about the stock. A key reason for renewed interest in the stock is two fold. Firstly, it previously occupied lofty highs around the $40 dollar mark. Also the new CEO has shown a keen eye for business fundamentals.  All these indicators point towards a positive immediate future.


Earnings & Outlook

Earlier this year JCP announced major job losses as well as the closure of some 39 stores nationwide. Serge Berger of Investor Place is of the view that JCP would make for a good contrarian trade. In particular, there appears to be some buoyancy and momentum in the stock at present. In particular, earnings on May 13 came in with a narrower loss than originally forecast. The stock was only down 55 cents per share showing a return to form. The JCP Internet presence is reflected in a well-designed and convenient portal. Clearly the business has learned from other similar enterprises.


J.C. Penney Company, Inc’s CEO

In late 2014, Marvin Ellison was appointed CEO. Marvin displayed a strong history in supply chain management, an area critical to the success of midsized retail organizations such as JCP. From humble beginnings Ellison has enjoyed great success since taking over the reigns of the organization.

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JCP is a classic example of the clicks and mortar approach. The business consists of merchandise sales and services delivered through jcp.comand through local stores. Recently, JCP has outperformed the S&P 500 by 4.3%. Within recent weeks the outperformance hit 3.08% . Shares rose by 3.88% in the past week totalling some 2.79% overall for the last 4 weeks.


JCP Technicals

When we take a look at the stock over long periods of time we see that the stock has tumbled down from highs of $42.68 on February 12 in 2012. Two years later in February of 2014, the stock had fallen to an incredible $5.51. As of the end of June 2015, we see a rebound in some fortunes two dollars higher at $8.51.  From a resistance perspective $11.08 and $13.27 are the next important steps on the stairway towards previous ground.  At present, the stock is showing strong support in its present range with a bias towards the long side. When the stock hits $8.13 there is evidence of a potential rebound to $8.83 – $8.88 in the coming weeks. There may even be potential for strong gains in the short to immediate time frame based upon commentator sentiment.


Company Profile

J.C. Penney Company, Inc., through its subsidiary, J. C. Penney Corporation, Inc., sells merchandise through department stores in the United States.Yahoo! Finance