FIVE BELOW (NASDAQ:FIVE) Exhibits Strong Technical and Fundamental Momentum

The method used in this study joins Mark Minervini’s strict Trend Template with a concentration on high-growth momentum investing. Minervini’s system highlights finding stocks in solid uptrends with sound technical traits, while the high-growth momentum screen makes certain these stocks also display speeding up earnings, revenue, and profitability. This two-part plan seeks to seize equities possessing both technical health and fundamental growth possibility, matching the idea that lasting price gain is frequently supported by bettering business results.

Technical Health and Trend Adherence

Five Below Inc. (NASDAQ:FIVE) shows a solid technical picture that matches closely with Minervini’s Trend Template rules. The stock is trading well over its main moving averages, specifically, the 50-day SMA at $139.87, the 150-day SMA at $108.98, and the 200-day SMA at $106.79, with each average moving upward. This arrangement affirms both short and long-term positive momentum, a main part of Minervini’s plan meant to steer clear of stocks in basing or distribution stages.

Also, the present price of $149.06 rests easily inside 25% of its 52-week high of $155.34 and is over 30% above its 52-week low of $52.38, meeting Minervini’s need for stocks to show major recovery and nearness to new highs. These situations often point to lasting investor attention and lessened overhead resistance. The stock’s relative strength rating of 88.3 further affirms its market leadership, as it does better than most others, a main point in Minervini’s screening steps to find industry leaders before big breakouts happen.

Fundamental Growth Momentum

From a basic view, Five Below shows several features that interest growth-focused investors. Recent quarterly results feature:

• Earnings per share growth (Q2Q) of 50.0% in the newest quarter, with earlier quarters showing sound year-over-year gains as well.
• Revenue growth of 23.7% in the latest quarter, showing solid consumer need and effective expansion work.
• A marked free cash flow per share of $6.26, which has grown 92.5% over the past year, showing efficient capital handling and monetary soundness.

These measures are vital because Minervini notes that stocks with good technicals must also be backed by speeding up basics, like rising sales and earnings, to confirm the price trend and lower the chance of a momentum failure. The company’s skill to regularly exceed EPS guesses (with four straight beats and an average surprise of 44.8%) further supports its growth story, pulling institutional interest and giving a catalyst for continued upward movement.

Profitability and Operational Effectiveness

Profitability measures also match with high-growth hopes. Though yearly EPS growth has been varied, recent quarterly patterns show a major return, with the last quarter’s profit margin at 4.16%. Sequential gains in margins, along with rising revenue, hint at operational effectiveness and pricing strength. For growth investors, growing margins during a sales increase often shows a company’s skill to scale profitably, a main part in maintaining long-term outperformance.

Risk Points and Market Setting

While the stock’s technical and basic picture is sound, investors should note that it is trading near the top of its recent range, with resistance near $153.41. A breakout over this level might hint at more upside, but a failure to pass it could lead to consolidation. The wider market setting, with the S&P 500 showing positive short and long-term patterns, gives a supportive background for continued momentum in leading stocks like Five Below.

Technical Analysis Summary

According to ChartMill’s technical report, Five Below gets 8 out of 10 on both its technical and setup scores. The study features a steady performance history, with the stock trading near 52-week highs and showing better relative strength in the specialty retail industry. Main support levels are found between $136.47 and $139.89, giving a possible floor for any short-term pullbacks. The report proposes a breakout over $153.41 could act as an entry point, with a stop-loss set under the support area to handle risk. For a full breakdown, see the full technical analysis here.

Conclusion

Five Below shows a solid case for investors using a joined Minervini and high-growth momentum plan. Its following of trend template rules, strong moving average agreement, high relative strength, and nearness to new highs, is supported by speeding up basics, including sound earnings growth, rising revenues, and bettering cash flow. These parts together propose the stock is well-set for continued leadership, if it can pass short-term resistance.

For readers wanting to find similar chances, our High Growth Momentum + Trend Template screen often finds stocks that meet these strict rules. This screen can be a helpful instrument for discovering other possible high-growth leaders in trending markets.

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.