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Why Five Below Stock Is on an Uptrend in 2018

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Dec. 4 2020, Updated 10:52 a.m. ET

Five Below stock

Five Below (FIVE) stock has been on an uptrend on 2018 and has gained 47.9% YTD (year-to-date) as of July 5. Since its last earnings report on June 6, Five Below stock has risen ~21%. The company beat analysts’ estimates for both its top and bottom lines in the first quarter.

In comparison, department store retailers Dollar Tree (DLTR) and Big Lots (BIG) have fallen 21.7% and 27.3%, respectively, YTD as of July 5. Dollar General (DG) has risen 5.5%, while TJX Companies (TJX) has risen 24.3% YTD. In comparison, the S&P 500 Index (SPY) has risen 2.4% YTD. The index’s performance remains subdued given the trade tensions with key trading partners such as China.

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What lies ahead?

Five Below has increased its sales growth guidance following a strong first-quarter performance. The company now expects to report sales in the range of $1.502 billion–$1.517 billion compared to its earlier guided range of $1.495 billion–$1.510 billion. For 2018, the company now expects EPS of $2.42–$2.48 compared to its earlier guidance of $2.36–$2.42.

Five Below’s focus on the preteen and teen demographics and its competitive pricing of $5 and under are its biggest unique selling propositions. The company is also on a store-opening spree with a focus on locations in high-traffic areas. New stores have been the primary drivers of its sales growth. Five Below has raised its store openings goal to 2,500 locations by 2020, up from the 2,000 it projected earlier. It expects new store openings to be the chief catalyst to help it post sales growth of 20% by 2020.

Five Below is also investing in the training of its personnel to better assist its customers. All these initiatives have contributed to the company’s stellar financial performance, which should continue to boost the stock’s price movements.

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