Congratulations to Bill Mathews; his latest issue of The Cheap Investor marks his 37th year of publishing. In his anniversary issue, he issues a buy recommendation for troubled retailing firm J.C. Penney (JCP).

We recommended the stock in January at $2.91, and it hit a high of $4.06. However, it’s since fallen back to a recent low, and we think it’s time to recommend J.C. Penney again. The company operates 872 department stores in 49 states of the United States and Puerto Rico.

J. C. Penney sells merchandise through its department stores and website. The company primarily sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products, home furnishings, and large appliances.

The company has a good balance sheet with $181 million ($0.58 per share) in cash, a book value of $4.18 per share and a large debt of $4.4 billion. Insiders own 3% of the 314 million shares outstanding, and 306 institutions own 74% of the float.

Negative factors are that the price has been trending downward, and the CEO recently resigned to become CEO of Lowe’s Companies (LOW).

We think Wall Street looked at his resignation as very negative — jumping ship — when in fact, he was accepting a CEO position in an industry that he had worked in for 18 years; he worked at Home Depot (HD). We (and Wall Street) are waiting to see who J.C. Penney will chose to be its next CEO.

Meanwhile, capitalizing on the growth of the New York City market, on August 10 it is opening an all-new location at Kings Plaza in Brooklyn. The store will feature the latest JCPenney brands and concepts in a sleek and modern store environment, delivering more style and value for all hard-working Brooklynites.

While retail brick and mortar stores have been struggling, J.C. Penny is an American icon; and we think it will survive. New management could really help the company turn around. The stock is at a very attractive price, and we think it has the potential to move at least 50% from this low point.

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