February 26, 2014 4:52 PM | 2 min read |
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
(NYSE: JCP) fourth quarter results are not as bad as some had expected.The retailer has been struggling over the past 12 months amid weak sales, a
CEO shakeup and an
activist investor who pushed for change but ultimately
gave up and walked away."I think at this point so much of the bad is already in the stock," Craig-Hallum Capital analyst Alex Fuhrman told Benzinga this afternoon.Investors were hopeful today and helped raise the stock 5.86 percent by market close. The stock continued to rise in after hours trading, jumping more than seven percent at one point.Buyers seemed to be impressed with J.C. Penney's fourth quarter loss of $0.68 per share, which proved to be a bit better than consensus. Wall Street expected a loss of $0.76 per share.Revenue came in at $3.78 billion, which was lower than the Street estimate of $3.94 billion.
Comparable Store SalesOne of the key things that analysts were looking for was an increase in comparable store sales.During the April quarter, comps declined 18.9 percent, while total sales decreased 20.1 percent. Internet sales performed even worse, falling 27.9 percent from the previous year.Things did not improve in the July quarter. Compos fell 21.7 percent, total sales decreased 22.6 percent, and Internet sales fell 32.6 percent.This is one of the many reasons why J.C. Penney performed so poorly during the second quarter. The stock fell more than 35 percent between February 22, 2013 and March 6, 2013. It rebounded slightly in April and May, rising more than 31 percent. But then the stock took another tumble, falling another 17 percent over the next few weeks.J.C. Penney endured further losses during the November quarter. Comparable store sales fell 4.8 percent, but the retailer noted that comps were positive in October 2013 with a 0.9 percent increase.Once again, the stock fell along with those declines. J.C. Penney lost more than 60 percent of its value between July 22, 2013 and October 21, 2013.There was some pickup in November (J.C. Penney rose 25 percent), but the retailer began to tumble quickly after that and ended 2013 with a total decline of 56 percent.Thus far, J.C. Penney has fallen more than 36 percent (year-to-date) in 2014.Today J.C. Penney showed signs of improvement with fourth quarter comps increasing two percent. Online sales increased to $381 million, representing a 26.3 percent increase over the year-ago period.The retailer also said that it expects comps to increase three to five percent in Q1 2014.
Verdict: Not Everyone Is Buying The Turnaround StoryJ.C. Penney has shown signs of improvement, but it could be a long time before Wall Street's faith has been restored."I've got a very bearish view on the equity here," Fuhrman concluded. "They're gonna burn more than half their market cap in cash this year, which is gonna make this one pretty tough."Disclosure:
At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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