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Is JCPenny's 2013-14's Wonder Stock of the Year?



October 18, 2013 – Comments (5) | RELATED TICKERS: JCP , SIRI , NFLX

If you have invested for any period of time like myself, you can recall almost from memory what each year means to the stock market.  You could say that 2009 was the year of banks.  Any bank that didn't go bankrupt soared.  So did the infamous SIRI that at once on a Friday before the famous capital investment by Liberty Media was going for $0.05/share.  Do the math.  I know it hurts looking at today's price.

However, in that time frame there were also some big losers.  One of the popular ones was Old GM.  The one that went bankrupt and shareholders lost it all.  The New GM probably doesn't have many Old GM shareholders.  And then there the dozens of other financials that didn't turn out so well.

In recent years you have the TSLAs, CMGs, and NFLX.  NFLX in particular is funny in that it gave shareholders not 1 try, but 2.  Almost in back-to-back years precisely to get in.  The original shareholders made a larger multiple for obvious reasons since NFLX never fell down to $20/share range.  But still.  The multiple with today's price is still a 5-6 bagger. 

And the funny or sick thing is is that these aren't unknowns.  They aren't penny stocks.  They are actually talked about weekly if not daily.  SIRI isn't talked about so much because buying a $4/share stock isn't so attractive based on where it was trading.

So back to JCPenny.  It is a $7/share stock and falling.  You will have some investors believing it can bounce back.  Others say it is doomed to bankruptcy.  Then what happens to all there hundreds of owned-locations? 

The reality is that no one knows and any shocking news can make this stock soar or tumble in a single day.  It really comes down to risk/reward.  In an investing world where shareholders are always asking for the next "IT" stock that will turn there small fortunes into larger fortunes, they turn a blind eye to stocks like JCP.

I'm not saying JCP is a must-buy.  I'm just saying that opportunities like this come around once a year - maybe twice. 

Could it be 2013-14's Wonder Stock of the Year?

You decide!  Comment Below!!!

5 Comments – Post Your Own

#1) On October 18, 2013 at 3:31 PM, mikecart1 (75.95) wrote:

I am aware of errors above so to eliminate comments regarding those:

1) JCPenny is missing an 'e' every single time.  I will just say I was using play-on words hinting at the "penny" instead of "penney".

2) NFLX actually valleyed in pre-2010 and then in 2012.  The timing range wasn't the back-to-back as I originally said.

3) 2nd to last paragraph uses "there" instead of "their"

I guess this is what happens when you do a once through blog.  But gotta love an author that admits he stinks right hehe?

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#2) On October 18, 2013 at 7:32 PM, HarryCaraysGhost (87.66) wrote:

Tell you what, once Penny's hit's .12 (the same price I took a gamble with Siri on) I'm in.

Until then that has BK written all over it;)

You do make a good point that the locations are a valuable asset that someone else might swoop in to buy or partner with JCP before BK.


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#3) On October 19, 2013 at 10:38 AM, GirlsUnder30 (30.48) wrote:

Does anyone know which property is owned and not leased? The devil is in those details. I like the miners as a sector and one stock in particular looks like a multibagger. Have you guys seen this? 

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#4) On October 19, 2013 at 3:08 PM, constructive (99.96) wrote:

I'm just saying that opportunities like this come around once a year - maybe twice. 

In my opinion opportunities like JCP come along constantly, literally every day. 

JCP trades for 0.18x sales and 0.92x tangible book. There are plenty of cheap companies like that to choose from: TITN, PNX, or SYX for example. Is JCP cheap enough to make up for the fact that it's a terrible business? 

Others say it is doomed to bankruptcy.  Then what happens to all there hundreds of owned-locations?  

The same thing that normally happens in bankruptcy. Some assets might be sold off. Most would be kept by the company, which would wipe out old equity and convert debt to new equity.

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#5) On October 21, 2013 at 11:17 AM, mikecart1 (75.95) wrote:


Haha, I don't think I will be getting it if it is that low.  If it falls that low, then the point of no return will have passed dollars ago.


I don't think that info would be public.  But I think the store number as stated generally is 400+ around the country.  That is a lot of property that someone could use.  Perhaps distribution centers for something like Amazon.


While that may be true.  Those stocks you listed don't have the household name quality that can produce the volume needed to see the quick returns and ease of cashing in.  I see what you are saying about the bankruptcy though.

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