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J.C. Penney Surges 25% on Profit; Melco Crown Gains on Macau

By John Divine – Feb 27, 2014 at 6:27PM

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Walt Disney and the Dow both end higher as well as Federal Reserve commentary boosts the stock market today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The stock market edged higher today, as Federal Reserve Chairwoman Janet Yellen assured Wall Street that the central bank would continue trimming its monthly asset purchases as planned. Reading through the lines, investors took the central bank's steadfastness as a sign that the recovery is becoming more self-sustainable -- soon the training wheels are coming off, and the world's largest economy will be able to balance all on its own. With a sense of inflated pride and a hint of optimism, investors sent the Dow Jones Industrial Average (^DJI -0.56%) up 74 points, or 0.5%, to end at 16,272.

Walt Disney (DIS 0.74%) learned to ride the proverbial bike a long time ago, and today it's easily the largest diversified entertainment company in the world. Apparently Disney's magical touch extends far beyond the world of fantasy and princesses -- a magical touch can also be found in the company's board room. Chairman and CEO Bob Iger has shown remarkable vision since taking the helm in 2005, acquiring Pixar, Marvel, and, most recently, Lucasfilm, each of them multibillion-dollar enterprises with unrivaled portfolios of creative assets. Disney stock advanced in tandem with the Dow today, adding 0.5%.

Having given Disney some well-deserved kudos, let's remember that it doesn't have a monopoly on magic. J.C. Penney (JCPN.Q), of all companies, apparently kept a spare enchantment or two up its sleeve as well, as evidenced by the stock's monster 25.3% rally today. Its much-awaited fourth-quarter earnings announcement came yesterday, revealing the company's first profit in two years. More important, J.C. Penney sees sales firmly recovering in the year ahead, and thinks margins are on the up-and-up, too. It's a great outlook if it's true, but my colleague Dan Caplinger isn't ready to wager on it just yet.

Finally, shares of Melco Crown Entertainment Limited (MLCO 2.58%) added 3.3% on Thursday after several Wall Street analysts said February gaming revenue in Macau would probably be higher than previously expected. If this is true, Melco Crown Entertainment is positioned as well as anyone to benefit, since the company's casinos and resorts are positioned in Macau exclusively. Given Melco Crown's newly instated dividend policy, announced earlier this week, the stock has a lot of hype behind it right now -- which investors should consider before chomping up shares.

John Divine has long January 2015 $10 calls on J.C. Penney. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends and owns shares of Walt Disney. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,395.01 (-0.56%) $-194.76
Walt Disney Stock Quote
Walt Disney
$98.59 (0.74%) $0.72
Melco Resorts & Entertainment Limited Stock Quote
Melco Resorts & Entertainment Limited
$8.75 (2.58%) $0.22
J.C. Penney Stock Quote
J.C. Penney

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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