Five Below Inc (FIVE-Q)

They have found their niche, but as they grow larger there will be bigger challenges. He still likes their growth prospect, but he is cautious as the market is nearing the late stages of the bull market. He would continue to hold it.

They are doing better than when he discovered the company. Their valuation is on the higher end and they had a good run in the last year. Wait for a quarter when they miss expectations or the guidance is low. They recently said they see their target market from 2000 to 2500 stores.

(A Top Pick Mar 9/17, Up 73%) Their runway of growth is longer than DOL-T. It is a dollar store for tweens and teens. They just had their best Christmas quarter since 2012. It is lumpy here so he would recommend holding it, rather than buying it.

(A Top Pick Nov 28/16, Up 46%) A dollar store for teenagers that sells items for $5 and below. He would not buy it now. It is a hold because it is at an all time high. They went up a lot based on the fidget spinner.

The lower the volume, the less traders and the less players you have. Technical analysis is about crowd behaviour. When you have a smaller crowd, it is going to be a lower level of predictability. Chart shows this has been a wickedly volatile stock. It was moving in a sideways channel, had some rhythm, but now seems to have broken out. Given that it is a low volume stock, technically the breakout may not be as significant. You need lots and lots of players. So far, this looks good and if you had volume, that would add to this.

550 stores that sell primarily to teens with products $5 and below. They expect to get to 2000 stores.

A $5 and below retailer for teenagers. They only have 531 stores in the US. To put this in context, Dollarama (DOL-T) has over 1000 stores, and expects to meet saturation at around 1400 stores. Five Below thinks they can easily get to 2000 stores. They are only in 31 states and are just opening their 1^st store in California this spring. They are growing their store base 20% per year, year after year. (Analysts’ price target is $50.)