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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!