{"id":33433,"date":"2012-11-09T11:46:31","date_gmt":"2012-11-09T16:46:31","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/11\/jcpenney-is-toast-wal-mart-wins-among-retailers\/"},"modified":"2012-11-09T11:46:31","modified_gmt":"2012-11-09T16:46:31","slug":"jcpenney-is-toast-wal-mart-wins-among-retailers","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/11\/09\/jcpenney-is-toast-wal-mart-wins-among-retailers\/","title":{"rendered":"JCPenney is Toast: Wal-Mart Wins Among Retailers"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

Here is a headline that should come as no surprise to anyone: \u201cJCPenney (NYSE:$<\/span>JCP<\/a>)<\/strong> Turnaround in Doubt as Sales Plummet,\u201d CNBC<\/a>, November 9, 2012.<\/p>\n

Big shock.\u00a0 JCPenney has been a company struggling to find direction for the past twenty years.\u00a0 The company is a \u201ctweener\u201d that had a hard enough time competing with the likes of Wal-Mart (NYSE:$<\/span>WMT<\/a>)<\/strong> and Target (NYSE:$<\/span>TGT<\/a>)<\/strong> on the low end and with Dillard\u2019s (NYSE:$<\/span>DDS<\/a>)<\/strong> and Macy\u2019s (NYSE:$<\/span>M<\/a>)<\/strong> at the mid-range price point before<\/em> the internet revolution.\u00a0 But now that the company has to compete with established internet retailers like Amazon.com (Nasdaq:$<\/span>AMZN<\/a>)<\/strong> and every up-and-coming online retailer as well.<\/p>\n

To put it bluntly, JCPenny is toast.\u00a0 For a long-term play almost guaranteed to make money, you could consider shorting it and waiting for it to eventually go belly up.\u00a0 But that\u2019s not what I want to discuss today.\u00a0 Instead, I want to recommend that readers pick up shares of Wal-Mart.<\/p>\n

Consumer sentiment is improving\u2014Reuters reports<\/a> that it just hit a five-year high\u2014yet with the dreaded fiscal cliff looming in the wake of the presidential election, I expect consumer to be looking for bargains in their Christmas shopping this year.<\/p>\n

This is bullish for low-cost internet retailers, of course.\u00a0 Yet with Amazon.com and other major online players now forced to levy sales taxes, the cost differential with \u201cbricks and mortar\u201d retailers isn\u2019t as wide as it used to be.<\/p>\n

And this brings me back to Wal-Mart.\u00a0 In addition to running the largest chain of retail stores in the world by sales, Wal-Mart is aggressively jumping into Amazon\u2019s territory with an expanded online presence.\u00a0 It may be years before Wal-Mart is able to effectively compete with Amazon in the online sphere, but Wal-Mart\u2019s massive physical presence does give it one unique advantage over Amazon that I expect to be significant over time: the avoidance of shipping costs.\u00a0 As an example, I recently dropped several hundred dollars buying my son a tree house.\u00a0 Wal-Mart\u2019s price was roughly equal to Amazon\u2019s, yet I was able to save nearly $300 in shipping costs due to my option of picking up the boxes at my local store (alas, it has been two weeks and I am still trying to assemble the @#$&ing thing, but that is another story for another article).<\/p>\n

Wal-Mart trades for 13 times next year\u2019s expected earnings and yields a reasonable 2.2% in dividends.\u00a0 I consider this a stock that you can buy and hold for at least the next 1-5 years.<\/p>\n

Disclosures: Sizemore Capital is long WMT. This article first appeared on TraderPlanet<\/a>.<\/em><\/p>\n

SUBSCRIBE\u00a0<\/a><\/strong>to\u00a0Sizemore Insights<\/em>\u00a0via e-mail today.<\/p>\n

The post JCPenney is Toast: Wal-Mart Wins Among Retailers<\/a> appeared first on Sizemore Insights<\/a>.<\/p>\n

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