Sum Up The Pieces: FXD Could Be Worth $69
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 23 2024
0mins
Should l Buy FIVE?
Source: NASDAQ.COM
ETF Performance Analysis: The First Trust Consumer Discretionary AlphaDEX Fund ETF (FXD) has an implied analyst target price of $69.24, indicating a potential upside of 9.82% from its recent trading price of $63.05.
Stock Upside Potential: Notable underlying holdings such as Genuine Parts Co., Five Below Inc., and Tempur Sealy International, Inc. show significant upside potential based on analysts' target prices, with expected increases ranging from approximately 22% to 38%.
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Analyst Views on FIVE
Wall Street analysts forecast FIVE stock price to fall
19 Analyst Rating
11 Buy
7 Hold
1 Sell
Moderate Buy
Current: 201.230
Low
132.00
Averages
193.47
High
242.00
Current: 201.230
Low
132.00
Averages
193.47
High
242.00
About FIVE
Five Below, Inc. is a specialty value retailer offering merchandise targeted at the tween and teen demographics. Its assortment of products, including select brands and licensed merchandise. It is engaged in offering a group of products, including leisure, fashion and home, and snacks and seasonal. Leisure includes items such as sporting goods, games, toys, tech, books, electronic accessories, arts and crafts, and party. Fashion and home include items, such as personal accessories, attitude t-shirts, beauty offerings, home goods and storage options. Snack and seasonal include items, such as seasonal goods, greeting cards, candy and other snacks, and beverages. It also offers its merchandise on the Internet, through its fivebelow.com e-commerce Website, offering home delivery and the option to buy online and pick up in store. It also sells its merchandise through on-demand third-party delivery services to enable its customers to shop online and receive convenient delivery.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Market Volatility and Stock Performance Recap
- Tech Stock Pressure: Despite attempts by high-multiple tech stocks like Microsoft to bounce back, the broader market remains under pressure due to fears that AI disruption could undermine traditional enterprise software companies, with the S&P 500 and Nasdaq down 1% and 2%, respectively.
- Eli Lilly Strong Performance: Pharmaceutical giant Eli Lilly saw its shares rise nearly 10% after delivering a significant earnings beat, indicating strong market confidence in its future growth and likely enhancing its market share in the pharmaceutical sector.
- Eaton Stock Volatility: Eaton's stock fluctuated near the flat line after a mixed fourth-quarter report, ultimately closing up nearly 1%, with investor focus on the planned spinoff of its mobility business in 2027 potentially serving as a future catalyst for growth.
- GE Vernova Decline: Despite an upgrade from Baird to outperform, GE Vernova's shares fell 7.5% to around $722, reflecting market concerns about the energy infrastructure cycle, although analysts expressed optimism about avoiding overcapacity issues in the near term.
See More
Five Below Receives Double Upgrade from BofA Securities
- Leadership Change: Under new CEO Winnie Park, Five Below (FIVE) is shifting to a more merchant-led organization, which is expected to drive continued improvements in earnings and valuation, reflecting a focus on core and extreme value merchandise.
- Target Price Increase: BofA Securities upgraded FIVE from Underperform to Buy, raising the target price to $233, an 18% increase from Tuesday's closing price, indicating strong market confidence in its future growth.
- Merchandising Strategy Shift: The company is repositioning higher-priced items to the front of the store, emphasizing relative value, which is expected to drive increased traffic and transactions, with analysts noting potential for comp sales growth in the coming years.
- Growth Strategy Optimization: Management's decision to slow store growth to 9% from 15% will enhance site selection and execution, supporting consistent annual EPS growth of over 10%, while also improving EBIT margins and return on invested capital.
See More
Bank of America Bullish on Five Below's Growth Potential
- Leadership Changes: Analyst Ronald Ohmes from Bank of America highlights that the new management team at Five Below could drive a return to higher P/E multiples, particularly under the leadership of new CEO Winnie Park, which is expected to enhance performance.
- Product Line Refresh: The company has revitalized its product pipeline and introduced new 'extreme value' items, such as fitness products and apparel, which have provided customers with a sense of novelty, thereby enhancing sales potential and positively impacting future performance.
- Marketing Investments: Five Below's investments in marketing are expected to drive increased traffic and transaction volumes, with Ohmes noting that this will support higher average unit retail prices, leading to long-term same-store sales growth.
- Slower Store Growth: The company has reduced its store growth rate from 15% to 9%, which is anticipated to improve site selection and execution efficiency, a strategic move that should enhance overall business performance.
See More
Latest Wall Street Rating Updates
- AMD Rating Reaffirmed: Barclays reiterates its overweight rating on AMD, citing the company's growing share in the PC and server markets, alongside significant spending potential from clients like OpenAI, indicating strong future growth in AI.
- Airbnb Upgrade: Citizens upgrades Airbnb from market perform to market outperform with a price target of $160, anticipating multiple upcoming catalysts that could drive the stock beyond current expectations.
- GE Vernova Rating Recovery: Baird upgrades GE Vernova from neutral to outperform, asserting that concerns about capacity are overblown and that the energy infrastructure cycle is still in its early stages, positioning GE Vernova as a key beneficiary.
- Broadridge Financial Upgrade: DA Davidson raises Broadridge's rating from hold to buy, arguing that the recent 30% decline in shares presents a buying opportunity, maintaining a price target of $228 as the sell-off is seen as excessive.
See More
US-India Trade Deal Reduces Tariffs
- Tariff Reduction: The latest US-India trade deal cuts US tariffs on Indian imports to approximately 18%, while India commits to lowering barriers on select US goods and increasing purchases of US energy, agriculture, and manufactured products, thereby improving bilateral trade relations.
- Energy Procurement Shift: India’s commitment to phase out Russian oil purchases and redirect a significant portion of its energy buying towards the US and allied suppliers not only supports the growth of US energy exports but may also reshape the global energy market dynamics.
- Signet Jewelers Benefit: Jefferies analyst Randal Konik highlighted that Signet Jewelers Limited (SIG) stands to gain significantly as about 50% of its inventory is sourced from India, with the tariff reduction creating opportunities for incremental margin expansion, as its weighted-average tariff impact has dropped from 29.6% to 15.1%.
- Retail Sector Impact: Beyond Signet, Konik's team believes the tariff changes will also provide additional margin tailwinds for companies like Five Below (FIVE), Revolve Group (RVLV), and Nike (NKE), further enhancing their competitive positions in the market.
See More
Investigation into Five Below Officers' Fiduciary Duties
- Shareholder Rights Investigation: Halper Sadeh LLC is investigating whether certain officers and directors of Five Below, Inc. breached their fiduciary duties, potentially impacting corporate governance and shareholder rights.
- Legal Relief Options: Long-term shareholders may seek corporate governance reforms, fund recovery, or court-approved financial incentive awards aimed at enhancing company transparency and accountability.
- Importance of Participation: Shareholder involvement can improve company policies, practices, and oversight mechanisms, thereby enhancing shareholder value and ensuring more effective management of the organization.
- Legal Fee Arrangement: The law firm will handle the case on a contingent fee basis, meaning shareholders will not be responsible for legal fees or expenses, reducing the financial burden of participation.
See More
Market Volatility and Stock Performance Recap
- Tech Stock Pressure: Despite attempts by high-multiple tech stocks like Microsoft to bounce back, the broader market remains under pressure due to fears that AI disruption could undermine traditional enterprise software companies, with the S&P 500 and Nasdaq down 1% and 2%, respectively.
- Eli Lilly Strong Performance: Pharmaceutical giant Eli Lilly saw its shares rise nearly 10% after delivering a significant earnings beat, indicating strong market confidence in its future growth and likely enhancing its market share in the pharmaceutical sector.
- Eaton Stock Volatility: Eaton's stock fluctuated near the flat line after a mixed fourth-quarter report, ultimately closing up nearly 1%, with investor focus on the planned spinoff of its mobility business in 2027 potentially serving as a future catalyst for growth.
- GE Vernova Decline: Despite an upgrade from Baird to outperform, GE Vernova's shares fell 7.5% to around $722, reflecting market concerns about the energy infrastructure cycle, although analysts expressed optimism about avoiding overcapacity issues in the near term.
See More
Five Below Receives Double Upgrade from BofA Securities
- Leadership Change: Under new CEO Winnie Park, Five Below (FIVE) is shifting to a more merchant-led organization, which is expected to drive continued improvements in earnings and valuation, reflecting a focus on core and extreme value merchandise.
- Target Price Increase: BofA Securities upgraded FIVE from Underperform to Buy, raising the target price to $233, an 18% increase from Tuesday's closing price, indicating strong market confidence in its future growth.
- Merchandising Strategy Shift: The company is repositioning higher-priced items to the front of the store, emphasizing relative value, which is expected to drive increased traffic and transactions, with analysts noting potential for comp sales growth in the coming years.
- Growth Strategy Optimization: Management's decision to slow store growth to 9% from 15% will enhance site selection and execution, supporting consistent annual EPS growth of over 10%, while also improving EBIT margins and return on invested capital.
See More
Bank of America Bullish on Five Below's Growth Potential
- Leadership Changes: Analyst Ronald Ohmes from Bank of America highlights that the new management team at Five Below could drive a return to higher P/E multiples, particularly under the leadership of new CEO Winnie Park, which is expected to enhance performance.
- Product Line Refresh: The company has revitalized its product pipeline and introduced new 'extreme value' items, such as fitness products and apparel, which have provided customers with a sense of novelty, thereby enhancing sales potential and positively impacting future performance.
- Marketing Investments: Five Below's investments in marketing are expected to drive increased traffic and transaction volumes, with Ohmes noting that this will support higher average unit retail prices, leading to long-term same-store sales growth.
- Slower Store Growth: The company has reduced its store growth rate from 15% to 9%, which is anticipated to improve site selection and execution efficiency, a strategic move that should enhance overall business performance.
See More
Latest Wall Street Rating Updates
- AMD Rating Reaffirmed: Barclays reiterates its overweight rating on AMD, citing the company's growing share in the PC and server markets, alongside significant spending potential from clients like OpenAI, indicating strong future growth in AI.
- Airbnb Upgrade: Citizens upgrades Airbnb from market perform to market outperform with a price target of $160, anticipating multiple upcoming catalysts that could drive the stock beyond current expectations.
- GE Vernova Rating Recovery: Baird upgrades GE Vernova from neutral to outperform, asserting that concerns about capacity are overblown and that the energy infrastructure cycle is still in its early stages, positioning GE Vernova as a key beneficiary.
- Broadridge Financial Upgrade: DA Davidson raises Broadridge's rating from hold to buy, arguing that the recent 30% decline in shares presents a buying opportunity, maintaining a price target of $228 as the sell-off is seen as excessive.
See More
US-India Trade Deal Reduces Tariffs
- Tariff Reduction: The latest US-India trade deal cuts US tariffs on Indian imports to approximately 18%, while India commits to lowering barriers on select US goods and increasing purchases of US energy, agriculture, and manufactured products, thereby improving bilateral trade relations.
- Energy Procurement Shift: India’s commitment to phase out Russian oil purchases and redirect a significant portion of its energy buying towards the US and allied suppliers not only supports the growth of US energy exports but may also reshape the global energy market dynamics.
- Signet Jewelers Benefit: Jefferies analyst Randal Konik highlighted that Signet Jewelers Limited (SIG) stands to gain significantly as about 50% of its inventory is sourced from India, with the tariff reduction creating opportunities for incremental margin expansion, as its weighted-average tariff impact has dropped from 29.6% to 15.1%.
- Retail Sector Impact: Beyond Signet, Konik's team believes the tariff changes will also provide additional margin tailwinds for companies like Five Below (FIVE), Revolve Group (RVLV), and Nike (NKE), further enhancing their competitive positions in the market.
See More
Investigation into Five Below Officers' Fiduciary Duties
- Shareholder Rights Investigation: Halper Sadeh LLC is investigating whether certain officers and directors of Five Below, Inc. breached their fiduciary duties, potentially impacting corporate governance and shareholder rights.
- Legal Relief Options: Long-term shareholders may seek corporate governance reforms, fund recovery, or court-approved financial incentive awards aimed at enhancing company transparency and accountability.
- Importance of Participation: Shareholder involvement can improve company policies, practices, and oversight mechanisms, thereby enhancing shareholder value and ensuring more effective management of the organization.
- Legal Fee Arrangement: The law firm will handle the case on a contingent fee basis, meaning shareholders will not be responsible for legal fees or expenses, reducing the financial burden of participation.
See More
