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JimVanMeerten (65.24)

J C Penney is on the move

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October 11, 2010 – Comments (0) | RELATED TICKERS: JCP

I added J C Penney (JCP) to the Barchart Van Meerten New High portfolio.  JCP is one of America's leading retailers, operating department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet, jcp.com, and the nation's largest general merchandise catalog business. Through these integrated channels, JCPenney offers a wide array of national, private and exclusive brands.

We I was a kid my family was a Sear Roebuck family.  I always loved thumbing through the catalogue and learning the difference between the Good, Better and Best on all the products.  My Dad was in construction and always bought Craftsman tools and my grandfather and I used J C Higgins sports equipment unless I had extra money and then I'd upgrade to Ted Williams.  My school clothes were King's Row.  Every Friday night we'd go to Sear's Town on Sunrise and Federal Highway in Lauderdale and get candy from the kiosk under the escalator.  I thought Sears was the greatest store in the world, especially the Christmas toy catalogue.

That all changed one Sunday when Mr. Penney started wintering in Lauderdale and began attending First Lutheran.  Pastor Anderson would always introduce Mr Penney and he awlays had a dark 3 piece suit with a watch and chain in his vest pockets.  That was the day I became a Stafford man.  My first 3 piece suit was a Stafford and I still buy the label because of the reports I'd read in Consumer Reports about the quality of that clothing line.

Enough of memory lane. Why buy Jacque Pennee as people like to call it now?

Well this retailer has weathered the storm by cutting back on their store expansion plans and paying attention to costs and the bottom line.  Sames store sales are modestly up and profits are falling to the bottom of the earnings statement again.

Wall Street analysts predict small increases in sales of 1.40% this year and 2.40% next year but earnings are the real story. They predict increases in earnings of 32.70% this year, 26.80% next year and 12.29% annually for the next 5 years.  They have 7 buy and 8 hold reports issued to their clients.

Price momentum has been very robust with the stock shooting up 58.87% last month and Barchart issuing an 88% buy signal.  The stock recently traded at 32.48 well above its 50 day moving average of 23.29.  The stock hit new highs in 19 of the last 20 trading sessions and has a Relative Strength Index of 89.99% and rising.

General investor sentiment is solid with the CAPS members on Motley Fool voting 523 to 161 that the stock will beat the market.  The All Stars agree 158 to 37.

The stock looks good for the following reasons:
1 - Barchart 88% technical buy signal

2 -  19 new highs in the last 20 sessions

3 -  Wall Street brokerages have issued buy recommendations to their clients based on expected double digit increases in EPS for at least 5 years

4 -  Wide and positive general investor sentiment

 Since this stock is moving fast if you purchase please, please monitor the price on a daily basis as this issue will be over bought soon and will probably correct itself back to fair value.

Jim Van Meerten is an advisor to Marketocracy Capital Management who uses his model portfolios not only to manage their mutual funds but also their clients Separately Managed Accounts. You can read his blogs about those model portfolios and investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: Jim Van Meerten through Marketocracy Capital Management has an interest in the stocks mentioned in this blog.

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