Five Below (NASDAQ:FIVE) Shows Strong Growth Momentum and Technical Strength

Five Below, Inc. (NASDAQ:FIVE) has appeared as an interesting option for investors using systematic growth strategies. The stock recently appeared through a screening method that joins Mark Minervini's strict Trend Template with a High Growth Momentum (HGM) rating. This two-part method finds companies showing both solid technical price trends and sound underlying business momentum, targeting securities set for possible continued strong performance.

The Minervini Trend Template is made to filter for stocks in strong, confirmed uptrends, making sure they meet a high level of technical health before review. This methodical process helps investors concentrate on market leaders and steer clear of the dangers of buying declining stocks or purchasing into weak, corrective patterns. The High Growth Momentum rating adds to this by measuring the fundamental speed-up in a company's earnings and sales, making sure the technical strength is supported by bettering business performance.

Technical Strength and Trend Template Alignment

Five Below shows a nearly perfect match with the Minervini Trend Template's technical standards, which is a key part for finding stocks in a lasting Stage 2 advance. The template's rules are made to verify a stock is in a solid uptrend across many timeframes.

• Price Above Key Moving Averages: The current price of $156.29 trades well above its rising 50-day ($149.49), 150-day ($122.02), and 200-day ($113.57) simple moving averages. This structure confirms the stock is in a bull market phase across short, intermediate, and long-term time periods.
• Positive Moving Average Alignment: The 50-day moving average sits above both the 150-day and 200-day averages, while the 150-day is above the 200-day. This ordered, positive alignment of moving averages is a standard sign of building momentum and is a key filter in the Trend Template.
• Proximity to Highs: The stock is trading within 2.3% of its 52-week high of $159.93, meeting the template's need of being within 25% of the high. Stocks close to their highs often have the strongest momentum and are frequently industry leaders.
• Significant Recovery: The current price sits 198% above its 52-week low of $52.38, well beyond the template's minimum need of a 30% buffer. This points to a solid recovery and maintained uptrend.
• Superior Relative Strength: With a relative strength ranking of 91.08, Five Below does better than over 91% of all stocks in the market. Minervini states that the top performers usually have RS rankings above 70, ideally in the 80s or 90s, pointing to market leadership.

High Growth Momentum Fundamentals

The stock's interesting technical view is supported by a solid High Growth Momentum rating, which searches for major gains in sales, earnings, and analyst outlooks, important factors for strong performance according to Minervini's SEPA method.

• Accelerating Quarterly Earnings: The company has shown notable quarterly EPS growth, with the most recent quarter increasing 50% year-over-year. The previous quarter also showed sound growth of 43.3%. This quickening in profitability is a main focus for growth investors looking for earnings momentum.
• Strong Sales Growth: Revenue growth stays good, with the last quarter growing by 23.7% compared to the same period last year. Top-line growth is a key sign of demand and market share gain.
• Positive Analyst Revisions: Analysts have become more positive, increasing their earnings estimates for the next fiscal year by 9.66% over the last three months. Upward revisions are a strong catalyst that can draw institutional buying.
• Consistent Earnings Surprises: The company has exceeded EPS estimates in all of the last four quarters, with an average surprise of 44.8%. A record of positive surprises builds investor trust and often results in higher valuation multiples.
• Solid Cash Flow Generation: The company's free cash flow per share has grown by a notable 92.5% over the past year, pointing to good operational health and financial freedom.

Technical Analysis Overview

The independent technical analysis for Five Below supports the screening results. The stock gets a high technical rating of 9 out of 10, reflecting its solid and steady performance across many studied measures. Both the long-term and short-term trends are confirmed as positive. The analysis also mentions a good setup rating of 8, suggesting the stock is currently pausing within its larger uptrend, which can sometimes come before a new move higher. Key support levels are found between $144.95-$145.05 and $138.48-$140.52, giving clear zones for risk management, while near-term resistance is seen around $156.30-$157.10.

For a detailed look at the support, resistance, and trade setup analysis, you can check the full technical report for FIVE.

Conclusion

Five Below offers an interesting case for investors following a high-growth momentum strategy inside a solid technical structure. The stock meets the strict technical filters of the Minervini Trend Template, confirming its place in a maintained uptrend. At the same time, its underlying business momentum, marked by quickening earnings, solid sales growth, and positive analyst opinion, supplies the fundamental support that can push continued price gains. This combination of technical and fundamental strength is exactly what the joined screening method aims to find.

For investors looking for similar options, this stock was found using a methodical process. You can find more possible candidates by checking the High Growth Momentum + Trend Template screen here.

Disclaimer: This is not investment advice. The content is meant for informational and educational reasons only. Always do your own research and think about your financial position and risk tolerance before making any investment choices.