What a fantastic six months it’s been for Five Below. Shares of the company have skyrocketed 48.8%, hitting $134. This run-up might have investors contemplating their next move.

Is there a buying opportunity in Five Below, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Is Five Below Not Exciting?

We’re glad investors have benefited from the price increase, but we're cautious about Five Below. Here are three reasons why you should be careful with FIVE and a stock we'd rather own.

1. Flat Same-Store Sales Indicate Weak Demand

Same-store sales is a key performance indicator used to measure organic growth at brick-and-mortar shops for at least a year.

Five Below’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat.

2. Fewer Distribution Channels Limit its Ceiling

With $4.04 billion in revenue over the past 12 months, Five Below is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the bright side, it can grow faster because it has more white space to build new stores.

3. Previous Growth Initiatives Haven’t Impressed

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Five Below historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 11%, somewhat low compared to the best consumer retail companies that consistently pump out 25%+.

Final Judgment

Five Below isn’t a terrible business, but it isn’t one of our picks. After the recent rally, the stock trades at 29× forward P/E (or $134 per share). This multiple tells us a lot of good news is priced in - you can find more timely opportunities elsewhere. We’d recommend looking at the Amazon and PayPal of Latin America.

Stocks We Would Buy Instead of Five Below

When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.