Strong On High Volume: JC Penney (JCP)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified JC Penney ( JCP) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified JC Penney as such a stock due to the following factors:

  • JCP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $224.8 million.
  • JCP has traded 3.2 million shares today.
  • JCP is trading at 2.07 times the normal volume for the stock at this time of day.
  • JCP is trading at a new high 4.05% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in JCP with the Ticky from Trade-Ideas. See the FREE profile for JCP NOW at Trade-Ideas

More details on JCP:

J. C. Penney Company, Inc., through its subsidiary, J. C. Penney Corporation, Inc., sells merchandise through department stores in the United States. Currently there are 2 analysts that rate JC Penney a buy, 3 analysts rate it a sell, and 13 rate it a hold.

The average volume for JC Penney has been 17.3 million shares per day over the past 30 days. JC Penney has a market cap of $3.2 billion and is part of the services sector and retail industry. The stock has a beta of 1.62 and a short float of 28.5% with 4.03 days to cover. Shares are up 16.1% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates JC Penney as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • JCP has underperformed the S&P 500 Index, declining 14.97% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Multiline Retail industry and the overall market, PENNEY (J C) CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • PENNEY (J C) CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PENNEY (J C) CO reported poor results of -$6.07 versus -$4.49 in the prior year. This year, the market expects an improvement in earnings (-$2.47 versus -$6.07).
  • 36.01% is the gross profit margin for PENNEY (J C) CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.14% trails the industry average.

null

If you liked this article you might like

Can Private Labels Revive Retail?

Can Private Labels Revive Retail?

Dow Jumps Over 300 Points, Posting Its Fifth Straight Day of Gains

Dow Jumps Over 300 Points, Posting Its Fifth Straight Day of Gains

Do Robust Earnings for Tapestry and Michael Kors Signal a Retail Turnaround?

Do Robust Earnings for Tapestry and Michael Kors Signal a Retail Turnaround?

Investors Learned One Valuable Lesson Watching the Dow's 1,175-Point Crash

Investors Learned One Valuable Lesson Watching the Dow's 1,175-Point Crash

Retail Stocks Lose Post-Holiday Mojo, Get Swept into Market Meltdown

Retail Stocks Lose Post-Holiday Mojo, Get Swept into Market Meltdown