Story Stocks 2013: Netflix and J.C. Penney

Story Stocks 2013: Netflix and J.C. Penney
NFLX Photo by Matt Perreault

Many businesses lived through major highs and lows in 2013, but few saw the incredible swings experienced by Netflix, Inc. (NASDAQ:NFLX) and J.C. Penney Company, Inc.(NYSE:JCP). Netflix was still an unproven model at the end of 2012, and J.C. Penney was just beginning a series of earnings disasters in January of 2013. That said, both concerns have proved their critics wrong. Netflix has more than tripled its stock price in 2013, and J.C. Penney has reported excellent holiday sales and improving prospects.

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Netflix comes into its own in 2013

Netflix, Inc. (NASDAQ:NFLX) was still considered a “risky” stock in late 2012, but that changed rapidly in 2013, as the company morphed into one of the darlings of Wall Street. The story began with a blowout 4Q 2012 earnings report, leading to a 70% increase in the stock price within just a few days.

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The good news continued with another stellar earnings report in Q1 2013, resulting in another 22% gain in stock price. By April, Netflix, Inc. (NASDAQ:NFLX) was already up 125% on the year. The announcement of the Dreamworks partnership and other content-related moves added another 25% to the soaring stock price over the summer. Things have continued to go swimmingly for the company in the second and third quarters, with Netflix stock trading around $380 today.

J.C. Penney turnaround

On February 28th, 2013, J.C. Penney Company, Inc.(NYSE:JCP) announced that 4Q 2012 sales were down 28% y-o-y and that the company had recorded its worst annual revenue in more than 20 years. Not surprisingly, the disastrous news resulted in a 17% one-day sell off, and the stock was down 30% within a week.

Things just got worse for J.C. Penney Company, Inc. (NYSE:JCP) as the year progressed. Two CEOs, kicked off the S&P 500 (INDEXSP:.INX) and several debt downgrades later, the stock had plummeted to $6.24 and talk of bankruptcy or restructuring swirled around the beleaguered company.

Such talk proved clearly premature, however, when the company reported that 2013 Thanksgiving weekend same-store sales grew by a solid 10.1% over last year. This news, together with a number of analysts revising earnings upward, caused the stock to pop back into double digits for a short while, before settling in to trade around $8.75 today.

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