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