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Five Below, Inc. (FIVE)

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Shares of Five Below have not only soared but also outpaced the industry in a year. The company’s impressive merchandise assortment, focus on pre-teen customers, enhancement of digital and e-commerce channels, and pricing strategy help it stand tall in the dynamic retail landscape. Also, it remains focused on expanding store base and targets a network of more than 2,500 outlets in the long run. Notably, healthy performance of new outlets and sturdy comps performance fueled Five Below’s third-quarter fiscal 2018 results, prompting management to raise fiscal 2018 view. While the top and bottom lines registered eighth straight quarter of positive surprises, comps also rose for the eighth quarter in row. However, stiff competition from both brick-&-mortar and e-retailers and deleverage in operating margin owing to higher SG&A expenses remain concerns. Five Below’s seasonal nature of business also seems to be a hurdle.

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