Five Below (O:FIVE) emerged to fill the gap between dollar store and those offering products for more than $5. Or so it would seem. With a range of .41 to $5 on any item, it is a step up from the dollar stores, although they look pretty similar inside.
With all the hype of an economic slowdown (I am not in that camp for the record), you would think that the stock would be doing very well. In fact the stock has been in a funk, moving sideways-to-down through the back half of 2015. With the turn of the calendar to 2016, though, it is showing signs of life and now looks like a good buy.
The chart above shows many technical factors aligning, creating this environment. First is the Inverse Head-and-Shoulder pattern. This triggered with a push through the neckline to end last week. The pattern gives a price objective to at least $44.80. Next the last step higher that created the right shoulder was a run of about $6. This gives a Measured move higher to about 42.80 on a break of the current consolidation.
The Bollinger Bands® have turned up, allowing price to rise. And the momentum indicators are bullish, with the MACD crossed and rising and the RSI near 70. Finally, the SMA’s are starting to turn higher as well. The 20- and 50-day are rising and the 100-day looks to join them soon. So even if you do not shop at Five Below, it looks like a good time to buy the stock.