J.C. Penney Co Inc. shares rallied over 5% today to close at $14.85 after touching a five year low of $13.55 yesterday. The company has seen double-digit revenue decline over past several years and on the heels of a failed restructuring has been beaten down to it’s worst financial position in corporate history.
Despite the failing fundamental position of the company, SiAlpha signaled a POSITIVE rating on the shares yesterday for the immediate and short-term.
This iconic retail brand with $10 per share in net assets and $4 per share in cash is not going bankrupt any time soon. And the heavy selling yesterday seems to be the selling capitulation needed to form a short-term bottom in the stock with all the investors that wanting out, getting out.
Although we’re not as excited as Mr. Ackman who today said that he believes J.C. Penney is worth $75 a share.
We are however confident the shares provide good risk-to-reward opportunity at these levels. With strong price support at $13-14 a share and upside price potential of $18-20 over the next three months. Which would be a potential 20%+ return during the period.
For more details please order a full SiAlpha quantitative analysis of J.C. Penney here.
Disclosure: We have a net long position in J.C. Penny shares at this time.