Is Five Below (FIVE) a Good Long Term Investment?

Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund returned -25.81% net of fees compared to a -19.25% return for the Russell 2000 Growth Index. The fund underperformed in the second quarter due to widespread economic slowdown. In addition, please check the fund’s top five holdings to know its best picks in 2022.

In the second quarter 2022 investor letter, Polen Capital discussed stocks like Five Below, Inc. (NASDAQ:FIVE). Headquartered in Philadelphia, Pennsylvania, Five Below, Inc. (NASDAQ:FIVE) is a specialty value retailer. On September 29, 2022, Five Below, Inc. (NASDAQ:FIVE) stock closed at $138.40 per share. One-month return of Five Below, Inc. (NASDAQ:FIVE) was 6.61% and its shares lost 20.30% of their value over the last 52 weeks. Five Below, Inc. (NASDAQ:FIVE) has a market capitalization of $7.682 billion.

Here is what Polen Capital specifically said about Five Below, Inc. (NASDAQ:FIVE) in its Q2 2022 investor letter:

“Five Below, Inc. (NASDAQ:FIVE) is a leading, high-growth, value retailer in the U.S. with a differentiated and durable customer value proposition. This is a company we had previously owned in both the Polen U.S. Small Company Growth & U.S. SMID Company Growth Portfolio but sold it during the pandemic as we were concerned about the company’s ability to thrive during the pandemic with a business model reliant on physical storefronts and foot-traffic.

With more comfort that the economy is reopening and considering the stock’s big pullback over the past several months, Five Below is a compelling investment once again. The things that have us most excited are the company’s potential to grow its store base, its compelling store economics, the investments the company is making to remodel its stores, and its value orientation in a potentially difficult economy. We are excited about the company’s plans to triple its store base by 2030 and double its top and bottom line by 2025. Based on expectations of 15% square footage growth annually, modest store comps, and limited margin improvement over the next eight years as the company grows its store base as planned, we believe there is significant upside from current levels.”

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Five Below, Inc. (NASDAQ:FIVE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held Five Below, Inc. (NASDAQ:FIVE) at the end of the second quarter which was 37 in the previous quarter.

We discussed Five Below, Inc. (NASDAQ:FIVE) in another article and shared Polen Capital’s views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.