Is it time to invest in J.C. Penney?
The stock has been hammered in the last year, and more changes are expected in 2014. Buying it may be the ultimate contrarian move.
With revenue, profitability and margins continuing to decline for department store retailer J.C. Penney (JCP), the stock has been severely battered as a result, down 60% for the year.
Should value investors begin perking up their ears and digging into J.C. Penney, or is this truly a moribund stock that should be given a wide berth?
In this video, Fool analyst Taylor Muckerman sits down with host Mark Reeth to discuss J.C. Penney and its woes. Taylor points to a number of identity issues the company is struggling with, including yet another CEO change for the company as it looks towards redefining itself and finding a turnaround strategy that can pull it from the fire.Taylor also notes that if the turnaround is going to happen for J.C. Penney, it's all going to come down to margins. He points out that J.C. Penney's sales, general and administrative expenses, also called SG&A costs, are much higher as a percentage of sales than a lot of its peers, which are holding back its bottom line in a big way.
As well, J.C. Penney will simply need to increase the number of customers coming in the door. Taylor sees the company as very cheap today, but after the struggles J.C. Penney faced in 2013, he considers a play in J.C. Penney today to be the ultimate contrarian move.
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