Analysts Debate: Can J.C. Penney Company, Inc. (JCP) Become a Top Stock Once Again?

Travis’ take
I’ll admit that I’ve never understood the general idea of the department store. Why do I need to walk by the makeup counter to get to menswear? Why are there dishes in the same store as lingerie? I just don’t understand why I would want to shop for random items in the same store when they all have their own dedicated store a few steps away in the actual mall.

To me, this debate comes down to two things: Is the department store dead? and Can J.C. Penney survive?

To the first question, I don’t think we need all of the department stores currently in existence, so some are going to fail. There’s simply too much competition from online retailers, and big brands have chosen to build their own stores instead of attaching their reputation to someone like J.C. Penney. The department store is slowly being relegated to antique status by most shoppers.

With my bearish view of the department store in mind, I see Sears being in worse shape long term because it doesn’t even seem like it cares anymore. At least J.C. Penney is trying to be hip and cool with nice styles and a brand that a designer spent more than 20 minutes contemplating. But there’s no reason both Sears and J.C. Penney can’t fail miserably in staying relevant to the modern consumer.

My concern with an underperform call is: With a $3.7 billion market cap, there’s only significant upside on the call if the company fails. There’s a ton of risk if Ron Johnson is able to pull a rabbit from his hat and even marginally improve financial results. With that said, I’m in for an underperform call, but I’d like to keep this on a short leash and be willing to take a profit even at a 15% gain.

The article Analysts Debate: Can J.C. Penney Become a Top Stock Once Again? originally appeared on Fool.com.

Fool contributors Sean Williams and Alex Planes hold no financial position in any company mentioned here. Fool contributor Travis Hoium owns shares of Apple. You can follow Sean at @TMFUltraLong, Alex on Twitter at @TMFBiggles, and Travis at @FlushDrawFool. The Motley Fool owns shares of, and recommends, Apple.

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