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This stock up 40% this year, and there is more room to run: Trader

As many brick-and-mortar retailers continue to feel the pain from ever-changing consumer trends, one name could be a screaming buy heading into the fall: J.C. Penney.

Penney has gained 40 percent this year while comps like Macy's and Kohl's are down 4 and 21 percent, respectively. Additionally, ahead of Friday's second-quarter earnings report, J.C. Penney shares have jumped 28 percent since the May lows.

CNBC "Fast Money" trader Steve Grasso believes the best is yet to come for the stock.

During a "Behind the Trade" breakout special, Grasso highlighted that in the past year JCP's price has fallen within a trading range of $12 to $7. From here, the trader reasoned that one could expect the stock to head higher in the long term as $7 likely represents a key support level, according to an analysis using a Fibonacci retracement.

Previously, Grasso purchased J.C. Penney at $8.25 level and added momentum, but sold his position when he was up roughly 10 percent.

"Now, I am waiting for a lower entry level to hopefully do it all over again," Grasso said of his short-term strategy. Currently, J.C. Penney is trading below $9.54, where Grasso says the stock's most recent peak occurred. "Now, it's coming back in. It's made a series of lower highs. You do not want to buy a stock that's not on strength. Buy it on momentum."

Fundamentally, Grasso pointed to Penney's current management as an additional reason for optimism. He said CEO Marvin Ellison, who previously served as an executive with Home Depot from 2002 to 2014, has the know-how to sell clothing and big box items.

"J.C. Penney is selling appliances," concluded Grasso. "Their margins should explode from here."