The Daily Dose: Interesting Week

 | Apr 11, 2014 | 10:00 AM EDT  | Comments
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Stock quotes in this article:

jcp

,

ups

So, I went out on a limb Thursday and upgraded shares of J.C. Penney (JCP) for the first time ever. After the passing of my beloved dog earlier in the week, and the shocking death of '80s wrestling hero Ultimate Warrior, I figured YOLO (you only live once), so why not upgrade the stock ahead of the warmer weather months.

Here are a few specifics seeing as the call got picked up all over the place:

It was not so much takeaways from my discussion with J.C. Penney last week that led to the upgrade. I left concerned on the pace of quarter to date sales due to the missing arrival of spring across the country (and subsequent pick up in promotional intensity) and likely continued weak traffic in the reset home department. On the contrary, I think when weather has been cooperative throughout the U.S in the first quarter, J.C, Penney is sucking in a good bit of mall traffic.

The activity will be via a combination of effective promotional messaging (seeing more consistent promotions in the store, not intra-quarter spikes in worrying "% off signs" as was evident during the holidays), better in-stocks on name brand merchandise and basics and stores that are finally cohesive in terms of layout (home department finagling has concluded).

Mash up these store-level observations and consider the stock's relative outperformance during the recent broader market pullback. Then the sensible inference is that the return of the old, somewhat boring J.C. Penney is enough to deliver a key holiday 2014 performance that removes bankruptcy concerns and the need to raise further penalizing capital. Such an assumption is not priced into the stock.

Onto the Auto Show

Be prepared, the New York International Auto Show coverage will be dominating your life in the coming week. Trust me, I talk to many people in the industry -- the coverage will be excessive. I should know. I am working on a couple exec interviews! Rather than get captivated by the glitz and glammer associated with all auto shows, investors should be scouring live blogs and Twitter feeds for the following topics:

  • Any color on the race to release an autonomous car. Don't think that Google is the only one working on self-driving cars -- Audi and Nissan are also in the mix. Self-driving cars will very likely be on some roads (only four states allow them) by calendar years 2017 and 2018. Today is the day to research whose technology is going into the early round of vehicles.
  • Expect to see interviews with classic auto auction company execs. Be listening for comments on the health of the industry (sales, average prices, highest prices gained), I have found in the past this market is a nice leading indicator on the global economy.
  • By Wednesday (first press day), you should be looking for discussions of smart dashboards. Auto shows are beginning to morph into CES-type events with the automobiles playing second fiddle. Apple and Google currently dominate the budding smart dashboard market.

Spotted: UPS

I am never one to ignore signs in life, especially when they pertain to investing. I have been seeing a ton of United Parcel Service (UPS) trucks of all shapes on the streets lately. These sightings are almost telling me the economy could surprise in the second quarter following the brutal winter.

I am not sure if the market has seen the same thing as UPS shares are flat out lagging on a relative basis. If you have seen an abnormal amount of UPS vehicles in the last month or so, please do send me an email as I am really curious.

 

UPS
Source: Yahoo Finance

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