FIVE - Long

67 0 1
Five Below             is a specialty discount "dollar store" that targets the teen and pre-teen market with products priced at $5 and below. It is a relatively new company and has strong growth potential and the share price is currently at an attractive level to me. This company has a strong balance sheet and a well articulated road map to growth.

Fundamental Highlights:

1. The company should see margins improve over the coming quarterly earnings report as dollar appreciation will cut costs of imported products that the company sells. Another contributing factor for improved margins over this quarter is the completion of a central warehouse that should cut costs going forward.

2. The drop in energy costs has given the american consumer more discretionary income. This has been seen by latest consumer confidence surveys coming in very strong.

3. The company currently has 360 some stores located primarily in the East Coast. The opportunity for growth momentum to build is substantial as the West Coast remains an untapped market. The company plans on 2000 stores in the coming years.

4. Store awareness has been grown without major TV ads to date. A test case for TV ads was carried out last quarter with successful results. Plans to roll out widespread TV ad marketing should see a bump in comp sales over the coming quarters.

5. No debt and expanding cash flow! A great position to be in for a growth company to maintain momentum.

Technical Analysis:

The company saw a sharp sell off in the beginning of the year due to speculation regarding weak holiday sales. This resulted in a low being established in march which fell below the long established range. Price was able to retake the range after earnings settled the holiday fears and currently price sits on the bottom of the range and todays             daily candle seems to show a reaction off the support line. A break and hold above the 100 SMA could happen next week and would confirm to me the upwards direction of this trade. The target will be the top of the long established range at $40.

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