J.C. Penney Is Changing Course

NEW YORK (TheStreet) -- J.C. Penney (JCP) is a case study of the impact a CEO can have on a company's performance.

I always shake my head when I hear claims that CEOs are paid too much. Some are, but if J.C. Penney shareholders could get former CEO Ron Johnson back for free, I think they would take a pass.

Johnson is an exceptional leader, and I think he could do wonders at Sears (SHLD). I wrote as much in Sears Needs New Leadership Immediately, if Not Sooner. But after J.C. Penney reported surprisingly strong numbers on Wednesday, it's clear that Mike Ullman, the current CEO, is the man for the turnaround job. His plan is on track for future profits.

Stocks trade on emotion, but companies are valued on reality. Although those two are correlated, investment opportunities emerge when there's enough disparity. In Profit From J.C. Penney's Panic Selling and in Real Money Pro, I offered a bull thesis, and that's paid off in spades. But it's not time to ring the register yet.

As with a battleship, it takes time to shift course. As Ullman pointed out, his hands were tied with how much he could do right away when he returned. As the retailer continues to set a course for profits, investor confidence will build and buying pressure will continue. The recent washout below $5 was just that, a washout of the weak hands.

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