Sears Holdings Corp (SHLD), J.C. Penney Company, Inc. (JCP), Macy’s, Inc. (M): Hedge Fund Manager Still Bullish on This Real Estate Play

In doing this comparison, we see that Sears has the lowest PEG ratio and trades at the lowest price-to-sales ratio. J.C. Penney Company, Inc. (NYSE:JCP) has been seeing immense downward pressure on sales. In its recent quarterly results show that the story is still bleak for Penney. Comp sales from the quarter ending in April were down 16.6% year-over-year. Other recent news includes the fact that Ron Johnson is out and former CEO Mike Ullman has returned to the company.

One of the big headwinds for J.C. Penney Company, Inc. (NYSE:JCP) is robust competition in the apparel trail sector, as well, other headwinds, such as issues surround its coupon policy, has led to lower customer traffic. Traffic was down 11% in the first quarter, 12% in both the second and third quarters, and 17% in the fourth quarter of fiscal 2012.

Billionaire Bill Ackman of Pershing Square is still one of J.C. Penney Company, Inc. (NYSE:JCP)‘s big supporters, having 8% of his hedge fund’s 13F invested in the retailer (check out Ackman’s top stocks).

Meanwhile, thanks to Macy’s, Inc. (NYSE:M) affluent customer base, the retailer has weathered the economic slowdown nicely. Macy’s, Inc. (NYSE:M) recent quarterly results showed that EPS is growing nicely, posting $0.55, up from $0.43 in the same quarter last year. Comp store sales growth was 3.8% last quarter, and fiscal 2013 comp sales are expected to be 3.5%.

Macy’s, Inc. (NYSE:M) is also one of the top companies when it comes to managing and returning cash flow to investors. The company has been paying down debt and upping its dividend; in fiscal 2012, Macy’s paid dividends of $324 million and repaid debt of $1,803 million. Maverick Capital still has a lot of hope for Macy’s, Inc. (NYSE:M) future growth, with 4.3% of its portfolio concentrated in the stock going into 2013, which made the retailer its number-one holding (check out Maverick’s small cap picks).

Assessment

I think J.C. Penney Company, Inc. (NYSE:JCP) still has issues related to its turnaround. It appears there could still be downside in the stock. Meanwhile, Macy’s, Inc. (NYSE:M) appears to be a solid investment. Now, Bruce Berkowitz has studied Sears and sees an undervalued situation. He has the patience and is taking a long-term perspective. Over the long-run, I agree with his bullish position and see further gains in the stock over the next several years.

The article Hedge Fund Manager Still Bullish on This Real Estate Play originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall 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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