This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Investing Lesson of J.C. Penney

Stocks in this article: JCP

NEW YORK ( TheStreet) -- The J.C. Penney (JCP) saga continues, and it's not an uncommon story.

The old-time retailer where you grandparents probably shopped is trying to regain some of the relevancy it enjoyed during much of its 111-year history.

Unfortunately, that's a tall order. Just ask anyone you know how often he or she goes to the mall and visits the local Penney's. I'd be surprised if you get many responses in the affirmative.

It was just a couple of years ago that my brethren in the value crowd were touting the company as a must-own name.

That's when Ron Johnson, former Apple (AAPL) retail wiz took over as CEO.

Based primarily on the belief that Johnson could single-handedly turn the company around, investors bid shares up from $24 in August of 2011 to about $43 by the following February. I called that gain the "Ron Johnson premium."

Johnson would not only make a great CEO, many said, but he was also a true believer, putting his money where his mouth was. In fact, Johnson coughed up $50 million to purchase 7.3 million 7 1/2-year J.C. Penney warrants that he had to hold for at least six years. The kicker was the strike price-$29.92. If Johnson was willing to take such a risk, many believed, in which he could lose $50 million if the stock did not perform well, that was good enough for them.

JCP Chart JCP data by YCharts

Of course, the story did not quite work out as planned. Same-store sales plummeted, and Johnson was gone by this past April. Now the hunt is on for a new CEO, one that can "really" turn the company around. The quest, of course, is being driven by Bill Ackman, whose firm is Penney's largest shareholder.

It was Ackman that had the value crowd so riled up about the company in the first place. To his credit, Ackman has been a wise investor in many cases over the years, but this one has been a debacle so far.

As a frequent attendee of the Value Investing Congress, I saw the presentations on J.C. Penney firsthand, and was enamored by the company's vast real estate holdings.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs