I try not to fall on my own sword. What I mean by that is, I don’t take long term positions and ignore what the market is telling me. I don’t have that need to be right all the time. If I’m wrong, I take my licking and keep on ticking. Essentially, I’m not afraid to admit when I’m wrong about a stock. In the case of today’s Bull of the Day I used to be a big bear. But a lot of earnings momentum and some bullish revisions have collectively changed my mind.
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Admittedly, I called JC Penney (JCP) “JC Penniless” in a video Tracey Ryniec and I did late last year. At the time, nothing was going right for the company. Since then, things may have turned around. JC Penney, of course, is one of America’s leading retailers, operating department stores throughout the US and Puerto Rico. They also have one of the largest apparel and home furnishing sites with jcp.com.
The department store has struggled to reinvent itself and stay profitable as the traditional mall attendance continues to drop year over year. As internet retailers like Amazon demand greater market share the stress only increases for the brick and mortar retailers. This past Black Friday marked the first Black Friday where online orders trumped the physical store locations. This trend is likely to continue and the gap is expected to widen.
We’ve got them as a Zacks Rank #1 (Strong Buy) along with Growth, Value, and Momentum Style Scores of A. A big reason for the favorable rank is the aggressive earnings estimate revisions we’ve seen over the last sixty days. Eight analysts have increased their estimates for the current year while only one has dropped their number. The result has increased our Zacks Consensus Estimate from a 28 cent loss to a 4 cent gain. The most recent earnings estimate revision saw one analyst jack up their number to a 12 cent gain for the current year.
Shares of JCP have come down a big following a furious rally that doubled the market cap. The stock bottomed shortly after the start of the New Year, approaching $12 in early March. Since, JCP was retreated to $10.43. The $10 level is significant support for two reasons. First, it’s there’s psychological impact of double digits. Second, it’s where a major resistance area was during September and October 2015. I’d be looking to add shares here with a tight stop near $9.75.
Be sure to click FOLLOW THE AUTHOR above to stay on top of all the hot momentum stocks at Zacks.com. David Bartosiak is the Momentum Stock Strategist with Zacks, editor of the Momentum Trader and Home Run Investor, and host of “Trending Stocks”