By Mike Cintolo, Cabot Top Ten Trader

For our latest Editor's Choice, we're selecting a stock that recently broke out of an eight-month base on humongous volume.

J.C. Penney (JCP) is far from being a growth stock, but the market seems convinced that it’s on the cusp of a powerful turnaround. Indeed, the company is just embarking on an aggressive turnaround plan. Actually, it’s more of a total transformation, and so far investors like what they’re hearing. 

It all started with new CEO Ron Johnson, who officially took over in November. He was the head of retail operations for Apple and the pioneer behind the hugely successful Apple retail locations. 

Johnson recently announced a host of changes that will be implemented in the months and years ahead: an everyday low-price strategy, with the price of many items cut 40% or more to better compete with the likes of Target and Wal-Mart. 

More than that, though, the company will cut back on myriad (and often confusing) promotions and reorganize the stores into collection- and brand-specific layouts. 

Johnson will invest $800 million this year to finance the transition, but on the other side of the coin, he believes the company can cut costs by $900 million during the next two years. 

The top brass thinks earnings this year could leap above $2.10 per share, miles above estimates of $1.65 or so. 

Of course, there’s no proof that this turnaround will work, but the market is putting its faith in Johnson and the path he laid out last week. It’s an intriguing situation.

JCP has been anything but a growth stock for years, though it has had some big multi-year moves. It’s gone from $79 in 1998 to $9 in 2000, back up to $87 in 2007, before crashing to $14 in 2009. 

Since that most recent low, not much had been happening, which was why new management was brought in. 

But that’s changing; JCP built a beautiful eight-month cup-with-handle base, including a nice, tight four-week zone in the mid-30s. Then the stock exploded to new highs on volume that was nearly 10 times the average. 

It’s not going to double overnight, but after a long period of nothing, JCP should move higher from here.

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