J.C. Penney Stock's Road to Recovery

Over the last few years, it's been a rough ride for investors in shares of J.C. Penney (JCP) Still, the stock is up 47% in 2016. Is this company on the road to recovery?

On Aug. 17, J.C. Penney held an analyst meeting that laid out its recovery plan. CEO Marvin Ellison has done a wonderful job stabilizing the company. In 2010, J.C. Penney had sales of $17.8 billion. Sales bottomed in 2013 at $11.9 billion. Now, three years later, the company is forecasting sales of $13 billion. While that's a long way from the nearly $18 billion in sales the company once had, it's still up almost 10% from the bottom in one of the toughest retail environments in memory.

Even more impressive than the sales recovery is the rebound in earnings before interest, taxes, depreciation and amortization. EBITDA bottomed out in 2013 with a $641 million loss. Today, the company sees adjusted EBITDA at $1 billion.

Ellison has focused on several important trends to bring customers back into the stores. The company is looking at filling unmet needs in certain demographics, like the increase in the Hispanic population, by catering to their needs.

J.C. Penney is targeting the "special size" community, since management believes 38% of the U.S. population wears a special size. That market is expected to grow by 50% in the next 10 years.

The appliance market is a $38 billion market and is forecast to grow 32% to over $50 billion by 2020. The company is also expanding its home offerings by selling window coverings, Empire flooring, Ashley Furniture, and various soft goods.

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