14.12.2019 22:00:00

Will Five Below Continue to Be Volatile in 2020?

Five Below (NASDAQ: FIVE) operates a chain of 900 stores that sells a wide variety of items for less than $10, the vast majority of which cost $5 or less. The company appeals to numerous demographics, but it has a special focus on adolescent consumers. The store serves a market niche between dollar stores, such as Dollar General and Dollar Tree, and large discount retailers such as Walmart and Target. Five Below is not known as a volatile stock, with a low, 0.53 five-year beta. While the company's 23% average sales growth rate is substantially higher than its more mature competitors, there is limited volatility in the company's fundamental performance. Its gross, operating, and net margins have all been fairly stable, falling within a 150 basis point range over the past five years. The store's offerings and target market make its performance relatively insulated from economic cycles and the encroachment of e-commerce. Five Below sells low-ticket, consumer-staple goods that shoppers are generally seeking for immediate use. It makes sense that these characteristics would be associated with limited volatility. Image Source: Getty ImagesContinue reading
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