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RallyCry (< 20)

JCP at $14.50 - Overdone

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March 06, 2013 – Comments (8) | RELATED TICKERS: JCP

Call me a contrarian but I think JCPenney (JCP) at $14.50 is way overdone. The company is struggling but its being priced over the last week like it is going out of business. I know Ron Johnson has underperformed but no one said it would get better overnight. The sad truth is if they fired him, the stock would probably jump much in the way Groupon traded higher after their CEO left recently. Also at some point shorts will probably cover some of their positions seeing how it has already crated from $23 to the mid teens in the blink of an eye. I am not a huge fan of technical analysis but even a dead cat bounce to $16 seems very possible.

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8 Comments – Post Your Own

#1) On March 06, 2013 at 3:57 PM, RallyCry (< 20) wrote:

sp. cratered

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#2) On March 06, 2013 at 4:09 PM, RallyCry (< 20) wrote:

The other thing that could happen is if they cut some of the workforce, as cold as it sounds, it could help temporarily help with their cash flow issues. But only as a stop-gap measure.

Their operating income was less than stellar in the prior quarter and operating expenses jumped too as they tried to invest in new concepts.

As a matter of fact, there wasn't much of  anything to really feel good about last quarter. It just shows you turning around a small company like NLS is certainly much easier than a large one like JCP.

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#3) On March 06, 2013 at 5:46 PM, awallejr (80.11) wrote:

Well anything can happen on a trade play, but I see no reason to invest good money into a company losing money when there are plenty of better stocks for the same price or less making money.

Personally I didn't have much faith in Johnson's "vision."  People would rather see a $100 item marked off on sale for $50 than seeing that same item just selling for $50.

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#4) On March 06, 2013 at 5:59 PM, EnigmaDude (96.46) wrote:

If you are looking for a bounce you may want to consider EBIX.  The stock took a nosedive due to some allegations of accounting fraud in a Seeking Alpha article but the company is profitable and growing, assuming that the accounting is not fraudulent. I think the chances of seeing a pop in their stock is much higher than JCP!  And they report earnings next week.

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#5) On March 06, 2013 at 9:51 PM, awallejr (80.11) wrote:

I wouldn't touch EBIX either if there is any truth to an accounting fraud.  But again anything can happen with a "trade."  Why not pick some quality companies selling on the cheap.  I still love XRX for example. and you can buy almost twice as many shares and get a better yield than from a bank.  But that is a long term hold not a trade.

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#6) On March 07, 2013 at 9:08 AM, RallyCry (< 20) wrote:

The other thing that could happen is if they cut some of the workforce, as cold as it sounds, it could help temporarily help with their cash flow issues. But only as a stop-gap measure.

Looks like they have done just that:

http://www.cnbc.com/id/100532140?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

As an aside, I was actually in JCP last night returning a gift and there are some promising things going on. The layout of the store is easy to navigate, the prices are clearly marked and from the few employees I came in contact with, they seemed in good spirits and provided good service. Segments of the store were under construction and I think the curiousity factor combined with returning to coupons and sales will help to drive people back into the store. Maybe this could buy Ron Johnson time if he can make it through next quarters earnings.

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#7) On March 07, 2013 at 4:39 PM, ClandPhoenix (88.16) wrote:

The best swimmer on a sinking ship either finds another one or drowns like everyone else. A brick and mortor retailer changing the layout of the store has not found a new ship.

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#8) On March 07, 2013 at 6:41 PM, RallyCry (< 20) wrote:

If they can stem the tide next quarter, Ron Johnson may not sink. Right now he's looking for a port in the storm.

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