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Buy J.C. Penney: The Turnaround (And Rally) Has Only Just Begun
Posted February 2, 2012
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By Helix Investment Management
For many, the most exciting thing in retail right now is Ron Johnson's push to modernize and reinvigorate JC Penney (JCP). Given his achievements at Apple (AAPL) as well as Target (TGT), many assume that his efforts at JC Penney will be equally fruitful. After hearing his remarks at the JC Penney analyst day, and the unveiling of his new initiatives, we are confident that both JC Penney's business, and stock, are headed for a turnaround.
It is true that since JC Penney appointed Ron Johnson as CEO on June 14, 2011, its stock has soared, up almost 37%, compared to a 4.5% rise in the S&P 500.
Many have taken this run, especially the huge rally on the back of the company's analyst day, as a sign that the stock is done going up. But it is important to keep in mind where the stock has come from. Over the past 5 years, JC Penney has lost nearly half its value, as mismanagement tarnished the brand and cost the company dearly.
But now that Ron Johnson is in JC Penney's corner office, things are going to change. Investors might ask why we, and Wall Street, are placing so much faith in the abilities of Ron Johnson. The reason is quite simple. At Apple, Ron Johnson built and oversaw the most profitable retail chain in the world. Investors are expecting the same sort of magic at JC Penney. And we think that Johnson will deliver. Below we provide a quick overview of JC Penney's financials. Afterwards, we will delve into Johnson's strategic vision. READ FULL ARTICLE HERE
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