10 Stocks That Will Bounce Back According To Hedge Funds

5. Five Below, Inc. (NASDAQ:FIVE)

Year-To-Date Loss: 51.77%

Number of Hedge Fund Investors In Q3 2024: 36

Five Below, Inc. (NASDAQ:FIVE) is a mid-sized American retailer headquartered in Philadelphia, Pennsylvania. The firm sells a wide variety of products ranging from apparel to beauty products, board games, and consumer technology accessories. Five Below, Inc. (NASDAQ:FIVE)  benefits from some diversification in its revenue base. For the 39 weeks ending on November 2nd, 45% of the firm’s revenue came through leisure products while the remainder was accounted for by fashion, seasonal, and other products. Like any retailer, Five Below, Inc. (NASDAQ:FIVE) depends on high volumes for robust margins and same-store sales for market penetration. Additionally, the firm is reliant on consumer spending strengths, which have played a large role in its 52% year-to-date share price drop.

Polen Capital mentioned Five Below, Inc. (NASDAQ:FIVE) in its Q3 2024 investor letter. Here is what the fund said:

“We exited our position in Five Below, Inc. (NASDAQ:FIVE), the dollar store concept for tweens and teens. The business has struggled fundamentally with weaker consumer spending and lower margins, partially due to a problem with shrink (shoplifting). While many companies struggle with elevated shrink, Five Below’s problems were compounded by. a large investment in self-checkout, which made matters worse. The issue was in the process of being fixed, but the company was further hampered by growing pressure on consumers. We believe these issues may prove temporary but were surprised when the CEO was terminated. For now, we prefer to wait on the sidelines to ensure we fully understand the extent of the issues and how the CEO transition plays out.”