Macy’s, Inc. (M): This Stock Could Benefit From J.C. Penney Company, Inc. (JCP) and Sears Holdings Corp (SHLD)’s Decline

Page 1 of 2

Two of America’s biggest middle-income department stores are struggling. Sears Holdings Corp (NASDAQ:SHLD) is slowly bleeding cash, while J.C. Penney Company, Inc. (NYSE:JCP)‘s future remains highly uncertain.

If there’s one company that stands to benefit, it appears to be Macy’s, Inc. (NYSE:M). Although Macy’s, Inc. (NYSE:M) has vastly outperformed both Sears and J.C. Penney over the last year, further upside may lay ahead.

Macy's, Inc. (NYSE:M)

J.C. Penney’s failed turnaround plan

J.C. Penney Company, Inc. (NYSE:JCP)’s current predicament can mostly be traced back to its (now former) CEO Ron Johnson. Although J.C. Penney’s business was — at the time Johnson arrived — slowly fading into irrelevancy, the company was still profitable.

But Johnson changed all that. He drove away the store’s key customers by eliminating coupons and axing many popular brands. At the same time, he spent roughly $1 billion in a single year, mostly through store renovations.

Johnson stepped down in April, and the store’s old CEO, Mike Ullman, has returned. Discounts are back, and J.C. Penney Company, Inc. (NYSE:JCP) just unveiled its newly renovated home goods department.

So there’s reason to be hopeful. I myself own shares, along with legendary fund manager George Soros. But that isn’t to say that the investment isn’t without its risks.

The damage done over the last year might have been too much. At the same time, J.C. Penney Company, Inc. (NYSE:JCP)’s new home goods are more expensive than its traditional customers are used to, and a judge could still force the store to stop selling its Martha Stewart-designed products.

Sears might be worse off than J.C. Penney

Not even Sears Holdings Corp (NASDAQ:SHLD)’ bulls see much hope for the company’s actual business operations, instead focusing on the value of the company’s assets — in particular, its real estate.

Bruce Berkowitz’s Fairholme Capital is a major Sears Holdings Corp (NASDAQ:SHLD) shareholder. Specifically, as of the end of March, it represented more than 12% of his fund — about $1 billion of stock. In a presentation he gave last year, Berkowitz argued for Sears Holdings Corp (NASDAQ:SHLD)’ stock mostly on the value of its real estate holdings.

But not everyone agrees with Berkowitz. Analysts at Credit Suisse reiterated their Underperform rating last month after Sears Holdings Corp (NASDAQ:SHLD) reported a disastrous quarter. In their note, Credit Suisse raised the obvious question — if Sears’ business is losing money, but its assets are so valuable, then why does the company continue to operate?

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!