If JC Penney Sells Off After Earnings, Should You Buy?
On Friday, J.C. Penney is expected to report its second consecutive quarterly loss as well as slumping sales. Are results getting so bad, you should buy?
“The numbers are expected to be really ugly on Friday,” admits top trader Stephanie Link on CNBC's Fast Money Halftime Report.
On average, analysts expect a loss of 26 cents on revenue of $3.2 billion. “It could be a hard stock to own in the short-term.”
But in a case of ‘good things come to those who wait’ Link, who is director of research at TheStreet, says if you can buy and then hold the stock for a while, you’ll be rewarded.
Largely Link is bullish on new CEO Ron Johnson and his ability to turn the department store around.
“I think CEO Ron Johnson is better than what the bears say,” she explains. “I think he’s making interesting hires and developing interesting in store concepts.”
J.C. Penney is dramatically changing its selection of brands and the store experience. Starting Aug. 1, the chain is installing shops for Levi's and its Arizona brand. The goal is to eventually install 100 shops inside the stores that will replace the sea of mixed clothing racks typical of department stores. It also plans spots in its stores called Town Squares, similar to Apple's Genius Bars, which will offer services and advice.
Looking at the stock, after the broadcast, Link tells us if the stock pulls back on earnings, she’d pull the trigger - but as a long-term buy.
“Long term I think the floor is $19 and I see the stock going to the high 20’s - but over time.”
Posted by CNBC's Lee Brodie
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Trader disclosure: On August 9, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MSFT; Pete Najarian is long M; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long EMR; Stephanie Link is long DD; Stephanie Link is long BRCM
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