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Keep an Eye on Five Below: Its Stock Soared 48.5% in 2018

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Dec. 31 2018, Updated 11:07 a.m. ET

FIVE has risen

Five Below (FIVE) stock has surged 48.5% to $98.48 YTD (year-to-date) as of December 27. Its terrific top line performance has been one of the primary drivers of its impressive stock price movement.

However, in December, Five Below stock has fallen 6.0% mainly due to the broader market sell-off. December has been a tough month for both the S&P 500 Index and the Dow Jones Industrial Average.

The markets have been languishing as investors have fretted over the US-China tariff spat and the ongoing partial US government shutdown related to the funding of the border wall. In December so far, the S&P 500 and the Dow have fallen 9.8% and 9.4%, respectively. The S&P 500 is down 6.9%, and the Dow is down 6.4% as of December 27.

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What does 2019 hold for Five Below?

Five Below stock is likely to continue its good run in 2019. It’s a discount retailer, and its low-value pricing is its biggest strength. Merchandise at any Five Below store is priced at $5 or less, which is highly attractive to the cash-strapped preteen and teen demographics it serves. Recently, the company launched the “Ten Below or Just Wow” concept. It has introduced a merchandise collection with a price tag of up to $10. The pilot project has initially been unveiled in six stores.

While other retailers are reducing their store footprints, Five Below is on a store expansion drive. New stores have been driving its sales. For 2018, the company expects a total of 125 store openings. It estimates that it will have 2,500 stores across the United States in the long term.

Five Below sees the liquidation of Toys “R” Us as an opportunity to boost its sales. The company is working on a bigger and better product assortment to increase its presence in the toy market. Also, keeping in mind the US-China tariff spat, Five Below is working with suppliers to keep costs under control. It’s looking to source goods from countries other than China. It’s also exploring selective price increases should the necessity arise.

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