J.C. Penney Company, Inc. (JCP), Oil States International, Inc. (OIS): Secret Value?

As of January 2013, it had $3.17 billion in equity, only $930 million in cash, and as much as nearly $3 billion in long-term debt. The company has been trying different alternatives to divest several real estate holdings for more cash. J.C. Penney Company, Inc. (NYSE:JCP) and its advisers have been thinking of several options, including real estate spin-off and sale-leaseback.

Cantor Fitzgerald LP expected that the company could raise $1.5 billion by spinning off its real estate into a new company, and use this company to issue senior notes, backed by unsecured guarantees. J.C. Penney currently has nearly 112 million square feet of real estate in total. Indeed, if J.C. Penney operated as a REIT, it would be worth half of Simon Property Group, Inc (NYSE:SPG), or more than $20 billion. At $17 per share, J.C. Penney is worth only $3.7 billion on the market.

My Foolish take

As J.C. Penney Company, Inc. (NYSE:JCP) operates as a retail operator, not a real estate player, it would take a lot of time to unlock its huge potential real estate value. However, Oil States International, Inc. (NYSE:OIS)’ Accommodations segment is not about retail, it is about lodged properties. As the Accommodations segment has been generating decent operating income, it seems to be much easier and take less time to unlock its hidden asset value. Indeed, I personally think that Oil States could be considered an opportunistic stock.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Unlock the Hidden Value in This Stock originally appeared on Fool.com.

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