Jos. A. Bank, the clothier that tried to buy The Men's Wearhouseonly to get rebuffed – and then, in turn, become the subject of a Men's Wearhouse takeover attempt – is now setting its sights elsewhere.
Though Jos. A. Bank says it will no longer negotiate with Men's Wearhouse, it is reportedly in talks with Golden Gate Capital to buy Eddie Bauer, the retailer that previously filed for Chapter 11 back in 2009.
According Steve Cortes, founder of Veracruz TJM, investors should stay away from Jos. A. Bank's stock for the foreseeable future.
"I don't think this is a reason to get involved," says Cortes on CNBC's Street Signs' Talking Numbers segment. "It almost got a bit comical between Jos. A. Bank and The Men's Wearhouse…. The Men's Wearhouse channeled Moe Green from the 'Godfather' and said, 'You don't buy me out. We buy you out.' I think this is a story for investment bankers right now, not for long term investors."
Cortes is bearish on retail stocks and is short the SPDR S&P Retail ETF, the XRT. That ETF is currently down to where it was trading in late August while the S&P 500 is up nearly 6% in that same time period.
"To pay a market premium," says Cortes, "for Jos. A Bank right… doesn't make long-term sense."
According to Craig Johnson, Senior Technical Analyst at Piper Jaffray, the charts are telling a different story.
"We've recently seen the shares reverse about a two-year downtrend," says Johnson, who notes that the stock is now pulling back towards the $52 mark, which he sees as a support level for the stock. "Something is getting a lot more constructive with Jos. A Bank. A measured objective here could put the stock into the low $70s. Things are getting better; they're more positive than what you're seeing on the fundamental side. And, at the end of the day, stocks don't lie."
To see the rest of the discussion on Jos. A. Bank, watch the video above.
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