Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

Five Below

(

FIVE

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Five Below as such a stock due to the following factors:

  • FIVE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.7 million.
  • FIVE has traded 1.2 million shares today.
  • FIVE is trading at 35.35 times the normal volume for the stock at this time of day.
  • FIVE is trading at a new high 12.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on FIVE:

Five Below, Inc. operates as a specialty value retailer in the United States. The company offers various products priced at $5 and below. FIVE has a PE ratio of 44.8. Currently there are 10 analysts that rate Five Below a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Five Below has been 1.3 million shares per day over the past 30 days. Five Below has a market cap of $1.8 billion and is part of the services sector and specialty retail industry. The stock has a beta of 2.53 and a short float of 18.2% with 5.87 days to cover. Shares are down 21.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Five Below as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, premium valuation, poor profit margins, weak operating cash flow and disappointing return on equity.

Highlights from the ratings report include:

  • FIVE has underperformed the S&P 500 Index, declining 19.55% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • The gross profit margin for FIVE BELOW INC is currently lower than what is desirable, coming in at 30.17%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.39% trails that of the industry average.
  • Net operating cash flow has decreased to -$16.24 million or 39.90% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, FIVE BELOW INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

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