- Shares of Five Below have declined by 37% in the last two months, presenting a buying opportunity for long-term investors.
- The company has a strong balance sheet, clear growth potential, and a target demographic that is less sensitive to economic pressure.
- Five Below’s business model has shown consistent growth, and its growth potential is supported by its ability to self-fund expansion without debt.
Shares of Five Below (NASDAQ:FIVE) have seen a very large decline in the last two months. I believe this decline, while somewhat warranted, is likely overdone, and long-term investors would be wise to begin accumulating shares of the retailer at current or lower prices. Five Below has several qualities that make it more attractive relative to many of its competitors. These include having a pristine and debt free balance sheet, having a very clear long-term growth runway, and also having a target demographic, tweens and teens, that are not only less sensitive to economic pressure, but also have a higher natural propensity to spend than many others. For these reasons, I have begun building a meaningful stake in Five Below stock, and I would recommend long-term oriented investors use current and future price weakness as an opportunity to do the same.
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