M/JCP: Loud and Getting Louder

Takeaway: We've been vocal on our Macy's short call. The one you're hearing us get louder on is long JCP. No action yet. We're waiting on price.

Keith added M to our #real-time alerts on the short side into the close. That’s the trade you saw, because the stock call matched up with the research call.

 

The corresponding trade you have not yet seen is to long JCP. As we’ve hit on repeatedly over the past several weeks, we think that the improving sales trajectory in 2013 and incremental improvement in store layout and dot.com business will drive the stock higher this year – even if JCP needs to buy the better top line. That might not be the best ROIC decision, but we think that this stock will trade on revenue, not ROIC.

 

We’re not going to make many friends today in saying that given that nearly a third of the float is short. But we’d rather be right than make friends.

 

To be clear, if the stock call matched up to the fundamental call at the current price, Keith would have added it to our real-time alerts. He has not. Translation = he likes it lower. But if you are less price sensitive and want a contrarian idea that we think will gain momentum on the upside in 2013, this is absolutely one to consider. 

 

 

 


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