J C Penney Company Inc (NYSE: JCP ) - Shares of JCP stock fell almost 3% on Wednesday, offering traders an advantageous entry point in a company that is in the midst of a turnaround.
Analysts at S&P Capital IQ Equity Research note the retailer is "reconnecting with core customers" and driving higher sales conversion thanks to weekly promotions and the relaunch of private brands such as St. John's women's sportswear.
While they rate JCP stock a "Hold," they recently raised their 12-month price target by $2 to $11, which is almost 12% above the current price. The also increased their fiscal 2017 (ending in January) operating earnings estimate from 5 cents to 11 cents per share. And the fiscal 2018 forecast was bumped up by 5 cents to 80 cents per share. Capital IQ expects revenues to increase 1.9% in this fiscal year, and same -store sales to be up 3.5%.
Turning to the chart, JCP stock broke its intermediate bearish resistance line in mid-June. This was preceded by a dramatic selling climax in mid-May.
Then, following a three-month consolidation, shares broke from resistance at $9.80 on the strong earnings, jumping to a high of $11.30 last week on very high volume. The breakout was preceded by a golden cross - a long-term buy signal in which the 50-day moving average crosses up through the 200-day moving average - in early August.
Since that high-volume breakout, JCP stock has pulled back to its breakout point, which is a traditional place for traders to take a position.
Buy JCP stock at $9.80 for a trade to $11.20 and a potential gain of more than 14%. Longer-term investors should also consider purchasing shares to benefit from the expected turnaround in sales and earnings. They could easily see shares double or triple from the current price.
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