Macy’s, Inc. (M): This Stock Could Benefit From J.C. Penney Company, Inc. (JCP) and Sears Holdings Corp (SHLD)’s Decline

Macy’s could benefit the most

Assuming the worst-case scenario for both J.C. Penney Company, Inc. (NYSE:JCP)’s and Sears, Macy’s seems like the one store that could be poised to benefit.

Sears, Macy’s, Inc. (NYSE:M), and J.C. Penney frequently anchor the same middle-income shopping malls. In my area, the two closest shopping malls both have Macy’s, J.C. Penney and Sears stores.

Over the last year, shares of J.C. Penney have tumbled nearly 30%. Sears shares are down about 12%. Macy’s, Inc. (NYSE:M) shares? Up over 30%. Much of that performance may have been due to Macy’s own execution, but the decline of two of its major rivals certainly can’t hurt.

I asked Brian Sozzi, a retail analyst and CEO at Belus Capital, for his take on J.C. Penney and Sears. If you had to pick one I asked? Macy’s he responded — they’ll benefit from the eventual liquidations.

Even if that doesn’t happen, Macy’s might be worthy based on its own merits. Analysts at Sterne Agee recently initiated Macy’s, Inc. (NYSE:M) with a Buy rating and $60 price target — but at the same time, Sterne Agee sees upside for J.C. Penney.

Investing in department stores

Both J.C. Penney Company, Inc. (NYSE:JCP) and Sears Holdings Corp (NASDAQ:SHLD) have been poor performers in recent months. Both stocks remain hated — both are fairly heavily shorted. As of the last report, about 19% of J.C. Penney shares had been sold short, while 10% of Sears’ shares have been bet against.

But as those stores struggle, Macy’s seems poised to benefit. Many Macy’s, Inc. (NYSE:M) stores are located in close proximity to Sears and J.C. Penney stores, and of the three, it’s the one company whose management seems to be capable of executing.

The article This Stock Could Benefit From J.C. Penney, Sears’ Decline originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Joe Kurtz owns shares of J.C. Penney Company. The Motley Fool has no position in any of the stocks mentioned. Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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