Is J.C. Penney Stock Doomed?

With shares of J.C. Penney (NYSE:JCP) trading around $9, is JCP an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

J.C. Penney is a retailer operating more than 1,000 department stores in just about every state in the United States and Puerto Rico. Its business consists of selling merchandise and services to consumers through its department stores and website. It sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora, and home furnishings. The company has not done too well in recent years, but it is doing what it can to be a top provider of apparel and related products.

J.C. Penney shares have fallen more than 15 percent since Friday, when the struggling retailer announced that it was issuing $1 billion in stock, as it’s strapped for cash before the holiday season. On Monday, another investor announced that it’s dumping its J.C. Penney stock. Perry Corp. has sold more than half of its shares in J.C. Penney, reducing its total stake to 3.28 percent, Reuters reports. Some have speculated that a long government shutdown could spell the end for the retailer.

T = Technicals on the Stock Chart Are Weak

J.C. Penney stock has been getting hit hard in the past couple of years. The stock is now trading at lows not seen for a number of years. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, J.C. Penney is trading below its key averages, which signals neutral to bearish price action in the near term.

JCP

Source: Thinkorswim

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