What Happened?

Shares of discount retailer Five Below (NASDAQ: FIVE) jumped 2.8% in the afternoon session after JPMorgan upgraded the stock to 'Overweight' from 'Neutral' and raised its price target. 

The bank increased its price target to $186 from a previous $154. In the upgrade, the firm noted it saw the company's multi-year earnings growth hitting at least low double-digits. JPMorgan believed this growth would be supported by the continued opening of new stores and a steady increase in sales at existing locations. The bank also pointed to Five Below's recent efforts to improve its products, marketing, and the overall in-store experience as factors that should support consistent sales growth.

After the initial pop the shares cooled down to $159.72, up 2.2% from previous close.

Is now the time to buy Five Below? Access our full analysis report here.

What Is The Market Telling Us

Five Below’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 20 days ago when the stock dropped 4.4% on the news that a confluence of negative economic data pointed to a weak economy. The latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations are rising, while their outlook on the labor market is deteriorating. Consumers expressed greater concern about potential job losses and expect lower earnings growth, factors that directly impact discretionary spending. Adding to the unease, Chief Economist at Moody's Analytics, Mark Zandi, warned that 22 states are already showing clear signs of a recession, placing the broader U.S. economy in a precarious position. The ongoing U.S. government shutdown further dampens sentiment, threatening to weigh on incomes and purchasing power.

Five Below is up 61.2% since the beginning of the year, and at $159.72 per share, has set a new 52-week high. Investors who bought $1,000 worth of Five Below’s shares 5 years ago would now be looking at an investment worth $1,181.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.