A Rejuvenated J.C. Penney Soars; Netflix Rallies on Growth, Price Hike

With Easter just behind us and Passover nearly over as well, the stock market returned from its three-day weekend and finished the day with muted optimism. Most stocks advanced, but major European markets were closed today, and trading volume was light. Investors will have plenty to think about in the next few days, as a slew of companies report quarterly earnings and data about home sales and jobless claims become public. But on Monday the Dow Jones Industrial Average (DJINDICES: ^DJI  ) edged modestly higher, gaining 40 points, or 0.3%, to end at 16,449. 

Home Depot (NYSE: HD  ) nearly finished as the best-performing stock in the Dow today, with gains of 1.1%. My colleague Daniel James believes that the stronger-than-expected sales growth we saw from U.S. retailers in March bodes especially well for Home Depot going forward. The company, too, sees brighter times ahead, forecasting a pickup in overall sales and same-store sales in the coming quarters. Existing home sales in March as well as new home sales for last month should both be released by mid-week, giving investors a better gauge of how the real estate market is holding up.

J.C. Penney (NYSE: JCP  ) , another company that would likely benefit if consumers continue to flee from their homes and head to the mall as the weather improves, roared 9.2% higher on Monday. The sudden optimism is a little enigmatic; J.C. Penney won't report quarterly earnings until next month, and little of note happened with the company today. A volatile stock in the middle of a turnaround effort, shareholders watch each quarter with bated breath, watching carefully for ominous verbiage. Fellow contributor Brandy Betz wonders if the company can build a competitive advantage. So do I.

What I don't wonder about is Netflix (NASDAQ: NFLX  ) , which boasts a number of competitive advantages. Its share of the video-streaming market in the U.S. is high, it's a highly recognized and trusted name, and it's also begun developing some critically acclaimed shows of its own, strengthening its appeal to new customers. As a first-mover in the area, it was able to snap up customers early, retain them over time, and grow by word of mouth. Netflix also has plans to expand internationally. More important, Netflix beat earnings estimates in the fourth quarter, and reached 4 million domestic and international subscribers, far more than the 3.85 million analysts expected. It's also planning on bumping up its monthly price to new subscribers by one to two dollars per month, which should do wonders for Netflix's margins.

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