Is now the time to buy JC Penney stock?

Last week, JC Penney announced a 25 percent drop in sales and ditched superstar CEO Ron Johnson. Indeed, things at JC Penney are bad. The discount retailer's stock price is down 50 percent from when Johnson took the job in November 2011. At this rate, the company reportedly doesn't even have enough cash to continue operating beyond year's end.

But as the brand strategizes its return, many investors are wondering if they ought to jump on Penney's bandwagon while the stock is languishing. After all, if JC Penney does bounce back — a big if, of course — its stock price seemingly has nowhere to go but up.

JC Penney certainly isn't wasting anytime in plotting its turnaround. Today, the retailer announced that it has drawn $850 million from its $1.85 billion credit line. This will help Penney fund inventory restocking and other needs, the company said in a release, particularly for newly renovated home departments, a project that "will continue to experience a significant inventory build and increase in capital expenditures," CFO Ken Hannah explained. Other ways JC Penney may raise cash: Selling real estate, or finding a buyer for a minority share of the company or the stake in Martha Stewart's Living Omnimedia Company.

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The retailer is also figuring out how to get sales rolling again. One of Johnson's most controversial moves as CEO was scrapping coupon-clipping promotions, and the company is doing an about-face now that he's gone. That could pay off. Walter Leob of Forbes, for one, believes that "former customers will respond favorably to the promotions as J.C.Penney signals it has returned to a value driven stance."

That said, things still look pretty desperate for JC Penney. They're short on cash, and the stock was trading in the $14.60-$14.90 range on Monday morning, well below the share price a month ago, six months ago, a year ago, five years ago, and so on.

So: Should you play J.C. Penney for the bounce, as CNBC suggested Friday, or put up your hands and slowly back away? Jon Najarian, co-founder of OptionMonster.com, has decided to play. "I sold the April 14 puts," he said on CNBC, meaning that he bet the stock won't trade under $14 by next week.

But Stephen Weiss, managing partner at Short Hills Capital, disagreed: "In these situations, typically a new CEO will scare the crap out of everybody if only to reset the bar lower," he said.

There's a clear potential upside to JC Penney stock, but few people see a total turnaround as anything close to a lock — at least not yet. "The damage done to the company is probably permanent," Weiss said. But while things are tumultuous, Penney's stock isn't a bad pick for "the trade," he said — meaning that you buy it, wait for a short-term price spike, then sell.