J C Penney Company Inc (JCP) Revival Is On and the Stock Is Up

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J C Penney Company (NYSE:JCP) is one of the retailers to have hit hard in the past and is trying to come back with a bang. The company is reviving itself very well from the fear of being pushed into bankruptcy. The chain of retailer has not only delivered better than expected results in the most recent quarter, but the company has also been ranked as a top stock pick for the current year. Some of the brokerages have kept a very optimistic price target $17 though the stock is struggling to get past the $10 level.

Shares Upgraded

One of the primary reasons for struggling to get past $10 level is the absence of big buyers for J C Penney Company (NYSE:JCP). Those who build their positions at the levels of $8 or $9 lock their profit when it crosses $10-mark. Also, big investors have yet to repose their complete faith in the stock. For instance, on Monday, the stock advanced after Sterne Agee CRT upgraded the shares of the company to a rating of Buy from Neutral. However, the overall sentiments of the market dragged down the stock in the end.

The positive factors in favor of the chain of the retailer were that it was able to carve out more market share despite mall traffic trends remaining still weak. The last two quarters were a testimony to the improvement in the market share. After reaching $5.90, the 52-week low price, on December 9, the stock managed a gain of 57.5% till September 28. Earlier, Piper Jaffray analyst, Neely Tamminga, has not only maintained her Overweight rating but also kept a price objective of $17 while Sterne has a price target of $13 on the company’s shares.

Ranked Fourth Highest

Piper Jaffray analyst conducted a proprietary survey to explore the shopping behavior, as well as, the intention of women. Significantly, J C Penney Company (NYSE:JCP) was ranked the second most preferred shopping destination as far as fashion is concerned. That was a remarkable improvement from the fourth position held only a year-ago. The survey had shoppers  name the brand or the store name from where they will buy. Again, it was ranked the fourth highest. That was its best ranking in the last five-year period.

Another positive factor is the retention of the visitors. For instance, the survey indicated that shoppers, who bought fashion items in the last six-month period, will be more inclined to visit the store again for additional purchases during the next three-month period. Analyst, Tamminga also observed that the retailer has been launching new products of either exclusive or private brands. That included men’s suiting and casual line of clothes known as Belle + Sky. The brokerage believes that these were examples of the J C Penney Company (NYSE:JCP)’s continuous efforts to be innovative and stay relevant for the consumers.

Strong Labor Market To Help Retailers

The labor market in the United States has been improving. The number of jobless claims slipped to an eight-week low recently indicating the continued strength in the labor market. That was despite the tightening of financial market conditions recently. For more than two and half years, jobless claims remained below the 300,000 threshold limit. The strong labor market could be a fresh catalyst for the retail stocks, especially ahead of the holiday season. A strong labor market and low gas prices could help consumers to spend more allowing them to open their purses.

J C Penney Company (NYSE:JCP)’s turnaround has gained traction after two quarters of solid comparable store sales growth. Sales picked up while losses narrowed on a YOY basis triggering renewed optimism on the counter. As the growth is strengthening, investors might stick around for a longer period to realize better gains.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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