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Should J.C. Penney close 300 more stores?

August 25, 2014: 3:45 PM ET

Can J.C. Penney close its way to prosperity? JPMorgan analyst Matthew Boss seems to think so -- and it looks like the market agrees.

Shares of J.C. Penney (JCP) rose more than 5% Monday and are on track to close at their highest price since last September. The stock is now up nearly 20% in 2014.

To put that in perspective, the still unprofitable retailer is having a better year on Wall Street than rivals Kohl's (KSS), Wal-Mart (WMT) and Target (TGT).

Related: The woes continue for Target

The stock is also doing as well as much healthier competitors Macy's (M) and Dillard's (DDS).

Who's the Boss? The catalyst for Monday's move was a classic case of Wall Street celebrating what appears to be bad news. JPMorgan's Boss still has a "neutral" rating on the stock.

And his price target for the end of 2015 is $11 -- just 3% higher than current levels.

J.C. Penney will have to close more stores if customers keep leaving empty-handed.

J.C. Penney will have to close more stores if customers keep leaving empty-handed.

Boss was mainly optimistic about the possibility of JCP increasing its profits by getting rid of a LOT more stores than the 33 it already announced it was closing back in January.

Boss estimates that if the retailer shuttered 300 of its nearly 1,100 stores, that could increase earnings before interest, depreciation and amortization by $450 million. And that could justify a stock price of more than $20 a share.

JCP: Just Can't Profit. Let's be blunt. JCP is still a mess.

And while new-ish CEO Myron Ullman is doing his best to repair the damage created by his predecessor Ron Johnson -- who was actually lured away from Apple (AAPL) to replace Ullman in the first place -- he has a long way to go.

Johnson tried to make JCP cool. Like Apple. But nobody shopped at JCP because they thought the retailer was at the forefront of the latest fashion trends. They just wanted cheap pairs of St. John's Bay jeans. That's not the worst thing in the world.

Related: Sears more 'irrelevant by the day'

Yes, Ullman is getting rid of some of the store-within-a-store concepts that Johnson created. Ullman is also bringing back promotions and coupons, two things that Johnson curiously viewed as the equivalent of a four-letter curse word.

Sales are even growing again at J.C. Penney. That's a good thing. But it's a slow pace.

Analysts are forecasting a 4.6% increase in annual revenue this year to $12.4 billion. That is nearly 30% lower than what the retailer reported in 2012.

Finally, it's hard to get excited about JCP just because it might cut costs.

Just ask shareholders of Sears (SHLD) and RadioShack (RSH) how that's working out.

  • Caution! Avoid J.C. Penney stock

    Customers may be coming back to J.C. Penney. But investors need to be careful. The stock has enjoyed a huge bounce.

    The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

    "When it fits, you feel it," is the strange (and slightly dirty) new MORE

    - May 13, 2014 12:39 PM ET
  • J.C. Penney: 'American comeback story?'

    Investors love the back-to-basics approach from J.C. Penney. Can the rebound last?

    Don't look now, but J.C. Penney shares are on fire lately.

    The stock has nearly doubled since hitting a multi-decade low below $5 in early February. And it was up nearly 9% Tuesday to its highest levels since the end of last year.

    Why the optimism? Citigroup analyst Oliver Chen upgraded J.C. Penney (JCP) on Tuesday to a "buy" MORE

    - Mar 11, 2014 12:26 PM ET
  • Boo! J.C. Penney is a scary stock

    Cue the sad Charlie Brown music. JCP shareholders only got tricks instead of treats this year.

    The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

    Want to really freak out a trader this Halloween? Go dressed as former J.C. Penney (JCP) CEO Ron MORE

    - Oct 31, 2013 1:27 PM ET
  • J.C. Penney scores $1.75 billion loan from Goldman Sachs

    Wall Street has been taking a second look at J.C. Penney in the weeks since controversial CEO Ron Johnson stepped down.

    J.C. Penney said Monday that it secured a $1.75 billion loan from Goldman Sachs (GS). The announcement confirms reports late last week that that the retailer was nearing a financing deal with Goldman.

    Shares of J.C. Penney (JCP) rose more than 4% Monday. The stock gained 9% last week as investors welcomed MORE

    - Apr 29, 2013 12:25 PM ET
  • J.C. Penney surges as stocks slump. Huh?

    Wall Street wants to see more scenes like this from struggling retailer JCPenney. Sales are still plunging.

    The market slid Friday after a terrible jobs report. Retail stocks were not spared. The SPDR S&P Retail exchange-traded fund (XRT) was down nearly 1%.

    It makes sense. If the job market is going into another spring swoon, then consumers probably will spend less at the mall. So why on Earth were shares MORE

    - Apr 5, 2013 1:10 PM ET
  • J.C. Penney's friend list grows by one

    J.C. Penney has few friends on Wall Street, but Thursday, the troubled retailer gained one more.

    BTIG analyst William Frohnhoefer issued a "buy" rating, making him one of the few analysts to recommend purchasing J.C. Penney's stock.

    Frohnhoefer also set a price target of $22 per share. That's more than 40% higher from where J.C. Penney's (JCP) stock is currently trading. Early Thursday, shares slid 1% to $15.53.

    The call is a rare MORE

    - Mar 14, 2013 11:44 AM ET
  • J.C. Penney CEO impresses despite loss

    Click the chart to track shares of J.C. Penney.

    On paper, it was a really tough quarter for J.C. Penney (JCP), but CEO Ron Johnson was successful in convincing investors that the company is moving in the right direction.

    The retailer, which launched an overhauled pricing strategy in February, lost $147 million during the second quarter, nearly three times more than analysts were expecting. Sales were extremely weak, falling 23% overall from MORE

    - Aug 10, 2012 12:57 PM ET
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