Shares of Five Below are a Buy-People are Buying this Junk

We are issuing a buy alert on shares of Five Below (NASDAQ:FIVE).

After stores visits to 3 locations, today during what one would think would be a slow traffic day yielded surprising results. Granted this is not a scientific survey, but our visits to Buckle weren’t either. Our short play worked out fine in that case.  Let’s replicate that again on the long side this time.

One would assume a rainy day, coming off a holiday weekend would find a relatively dead store.
Not at Five Below.
All three stores had an amazing amount of foot traffic. You do not have to be a genius to see this store works for shareholders. Cheap crap with good markups.

 
It seems people are really attracted to the junk this store offers.
Let us not judge. Let us profit from this trend.

 
FIVE reports after market close on 6-1-17.
We are buying this name for an earnings pop.

 

Quarterly Earnings Surprise History

Fiscal Quarter EndDate ReportedEarnings Per Share
Jan201703/22/20170.9
Oct201612/01/20160.1
Jul201608/31/20160.18
Apr201606/02/20160.12

 

 
Retail is not dead. It appears stores like ULTA and FIVE are the new bosses.
This is, of course, a semi-risky play one could say since we are playing for an earnings pop.
With that being said Wall St loves a growth story and FIVE is bringing it.

 
I do not think one would have to wait too long even if we do not get the pop we are expecting.
So it might be prudent to keep some dry powder ready just in case this thing tanks a tad on the earnings release.
Good Luck & Stay Nimble