Strong On High Relative Volume: Five Below (FIVE) - TheStreet

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 or Stephanie Link.

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 $31.8 million.
  • FIVE has traded 122,315 shares today.
  • FIVE is trading at 6.20 times the normal volume for the stock at this time of day.
  • FIVE is trading at a new high 3.12% 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 54.7. Currently there are 9 analysts that rate Five Below a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Five Below has been 744,000 shares per day over the past 30 days. Five Below has a market cap of $2.1 billion and is part of the services sector and specialty retail industry. The stock has a beta of 2.54 and a short float of 21% with 13.59 days to cover. Shares are down 10.9% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Five Below as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, premium valuation and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 30.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FIVE BELOW INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, FIVE BELOW INC increased its bottom line by earning $0.58 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($0.91 versus $0.58).
  • FIVE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.36 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The gross profit margin for FIVE BELOW INC is currently lower than what is desirable, coming in at 33.38%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.45% trails that of the industry average.
  • FIVE has underperformed the S&P 500 Index, declining 20.72% 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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