Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why J.C. Penney Company Inc. Stock Jumped

By Jeremy Bowman - Mar 11, 2014 at 3:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

J.C. Penney shares soared on an upgrade today. Here's what you need to know.

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

What: Shares of J.C. Penney ( JCPN.Q ) moved up as much as 10% today after the company got an upgrade from Citigroup.

So what: Analyst Oliver Chen raised his rating on the department store chain from neutral to buy, saying that Penney's 2% increase in same-store sales "bodes well" for the stock going forward, and that concerns about liquidity have been overblown. Chen expects the company to have $2 billion in liquidity by the end of 2014, and to match its guidance of a mid-single-digit increase in comps this year, which will instill further investor confidence in the stock. He lifted his price target form $7.50 to $11. 

Now what: Shares cooled off later in the afternoon, trading up about 4%, but the stock has still gained more than 70% from its value before its earnings report came out two weeks ago. After posting positive comps and projecting a mid-single-digit gain in comps for the current year, the company is clearly headed in the right direction, but investors may be overlooking the hole that the company needs to dig itself out of. The 2% same-store sales increase follows a drop of 32% the year before, and Penney saw an operating loss of $1.4 billion in 2013. In other words, that red ink is not going away anytime soon. Long term, the retailer's viability still looks questionable. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.