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Why J.C. Penney Stock Popped Today

By Joe Tenebruso – Aug 29, 2019 at 7:29PM

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Investors bought the retailer's shares alongside company insiders.

What happened

Shares of J.C. Penney (JCPN.Q) jumped nearly 14% on Thursday, following share purchases by several of the company's executives.

So what

On Aug. 26, CEO Jill Soltau bought 500,000 shares of J.C. Penney stock at an average price of $0.56. Following the transaction, Soltau owned a total of more than 9.4 million shares of the company's stock, which is currently valued at nearly $6.9 million. 

Notably, Chief Merchant Michelle Wlazlo, Chief Customer Officer Shawn Gensch, and Board Director Javier Teruel also purchased J.C. Penney stock in recent days.

A person pushing a keyboard button labeled buy.

Image source: Getty Images.

Now what

While company insiders can sell for a host of reasons, including diversifying their investment portfolios and exchanging stock compensation for money, it's widely believed that they buy for only one reason: They think the price is going to go up.

So investors are likely viewing stock purchases by Soltau and her fellow executives as a sign that J.C. Penney may be about to turn the corner. But while some signs suggest that the struggling retailer's turnaround strategy may be taking hold, others -- such as its shrinking customer base and cash reserves -- are likely to make it difficult for the company to recover -- so much so, that some investors believe it's only a matter of time before J.C. Penney succumbs to its massive debt load and is forced into bankruptcy.

As such, J.C. Penney remains a high-risk investment, despite the recent purchases by Soltau and others. Moreover, there are better stocks to buy today.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.
JCPN.Q

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