"It's a turnaround so it's going to take some time. Inch by inch, the company is gaining its customers back, and they're projecting free cash flow to be positive for the year," said Mark Hake of Hake Capital Management on CNBC's "Closing Bell" on Wednesday.
Hake added that as the company's top line continues to grow, it should be able to "work down their debt," which will raise the value of the company.
"This stock is severely undervalued under a number of different valuations metrics, and I also believe it is a potential takeover story because of its low valuation at this price," he said.
Read MoreHoliday boost may not help these three retailers
Rick Snyder of Maxim Group believes Penney's gross margins are moving in the right direction. He said on "Closing Bell" that the company needs "sales and margins to get to that gross profit dollar level and right now they're not getting there."
Snyder said he believes sales will "continue to not grow. I think this is a $4 stock." Hake thinks Penney's is a $10 to $12 stock.
Investors anticipate "mass store closures" in the near future as the company continues its turnaround efforts and expands online and same-day delivery services. Penney's said it will hire 35,000 workers for the holiday season, in line with the number of seasonal hires for 2013.
Read More What goes for Macy's goes for retail? Outlook lowered
J.C. Penney appointed Marvin Ellison president and CEO-designee on Nov. 1 to assume the post on August 1. Ellison joined CFO Ed Record and CEO Mike Ullman in the company's earnings conference call where he told investors he joined Penney's at exactly the right time.
During the earnings conference call, Ullman said August was the strongest month of the third quarter, driven by sales in the back-to-school season. September was the weakest month due to significant sales slowdown from warmer-than-expected weather, which hurt J.C. Penney's ability to sell cold weather goods.
Ullman said the company expects sales to bounce back as winter sets in and anticipates same-store sales to rise 2 percent to 4 percent in the fourth quarter and rise 3.5 percent to 4.5 percent for the full fiscal year.
Correction: This article has been updated to reflect the amount that J.C. Penney earned per share a year ago.