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Could Penny Rebound After Rough 2013

David Becker
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Mid-range retailers showed that they can rebound with a make over, as seen with Macy’s (NYSE:M) and their remarkable return in 2013. So could discount retailers forge the same return to profitability.

JC Penny Co, inc. (NYSE:JCP) sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products, and home furnishings.

The stock price has rebounded nearly 50% since dropping by 50% during the early fall period. Investors are looking for a turnaround in this stock, as poor earnings have plagued the company throughout 2013.

The 52-week range of JCP is $ 6.24 – $23.10, which puts the current price in the lower half of the range. The most recent earnings report a decline in sale of 5% and the three year growth rate of sales is -14%.

The three year earnings growth rate is a negative 24%. The company has a debt to equity ratio of 93% and a profit margin of negative 9%.

Recent insider buying makes this stock attractive. Myron Ullman the Chief Executive Officer purchased 112,000 shares on November 22, 2013. This is the first insider purchase in nearly 12-months.

The technical outlook is interesting. It appears that an upward trend is beginning to take hold as the 20-day moving average is crossing above the 50-day moving average. When this occurs a medium term trend is considered in place. Momentum is robust with the MACD (moving average convergence divergence) index is print in positive territory. The RSI (relative strength index) is printing near 59 and climbing which reflects acceleration in price action.

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