Should You Be Worried About J.C. Penney's Default Scare?

J.C. Penney recently received a letter stating that it had breached a covenant regarding a small portion of a $2.8 billion debt -- which, if true, could cause the company to be forced to pay the entire $2.8 billion this year. In the video below, however, Motley Fool consumer goods analyst Blake Bos tells investors that you can often see these types of allegations with companies that are undervalued with a lot of stock sold short, and that based on the market's reaction to the news, it may not be nearly as serious as it sounds.

J.C. Penney has been a train wreck whose comeback always seems just around the next earnings corner, but people are beginning to doubt if CEO Ron Johnson can weave the same magic that he did at Apple. Investors wondering whether J.C. Penney is a buy today are invited to claim a copy of The Motley Fool's new must-read report on the company. Learn everything you need to know about JCP's turnaround -- or lack thereof -- and as a bonus, you'll receive a full year of expert guidance and updates as key news develops. Simply click here now for instant access.

The article Should You Be Worried About J.C. Penney's Default Scare? originally appeared on Fool.com.

Blake Bos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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