Stock (Symbol) |
Five Below (FIVE) |
Stock Price |
$66 |
Sector |
Retail & Travel |
Data is as of |
January 30, 2018 |
Expected to Report |
Mar 20 |
Company Description |
Five Below, Inc. (Five Below) is a specialty retailer offering a range of merchandise for teen and pre-teen customer. FIVE offers a range of products, all priced at five dollars and below, including select brands and licensed merchandise across a range of categories, including Style, Room, Sports, Tech, Crafts, Party, Candy and Now. FIVE operates 366 locations across 21 states. Source: Thomson Financial |
Sharek’s Take |
Five Below (FIVE), a dollar store for kids and teenagers, continues to be a marvelous retail stock. Five Below is a dollar-store concept for kids and teens that sells merchandise such as toys, games, party items, sports gear, clothes, candy & electronics for between $1 and $5 each. During the past three years Five Below has grown its store count from 366 to 437 and 522 (19% per year). In 2017 the company is on pace to open 100 more locations, with a long-term goal of 2000 stores nationwide. Five Below should be able to triple it’s store count long-term, which in my book means the stock has the opportunity to triple as well. New stores are approximately 8000 sq ft, cost $300,000 in cash to open, deliver sales of $1.6 million in the first year and payback the initial investment in less than one year. Management sees sales growth of 20% a year through 2020 Last qtr I criticized analysts having an Estimated Long Term Growth Rate of 22% per year on the stock, which was too low. This qtr they bumped it up to 28%. And although the stock is up big from a year-ago, it’s still reasonably priced with a P/E of 29. I see big things in store for this little chain, and my Fair Values are $82 for this year and $98 for next. |
One Year Chart |
Profits surged 80% last qtr and blew away estimates of 30%. WOW! Sales rose 29% with 9% same store sales growth. These are great numbers! Estimates got hiked too, with 2018 numbers rising from $1.97 to $2.33. Profit growth Estimates for the next 4 qtrs are 30%, 40% , 20% and 17%. The P/E falls from 34 last qtr to 29 this qtr as I’m looking ahead to 2018 estimates now. |
Fair Value |
My Fair Value is rising from a 32 P/E to 35. This company is firing on all cylinders right now. And the stock is very reasonable. |
Bottom Line |
Five Below has been thriving for years, but the stock just got noticed for being a good one last year. Even though FIVE is up big, there’s still great upside for both the short-term and long-term as well. Eventually I envision this stock getting bought out by a bigger dollar store player. FIVE ranks a solid 19th in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
19 of 39Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |