Analysis: FIVE

After you receive this Alert, we will be selling 50 shares of Five Below (FIVE) at roughly $122.89. Following the trade, FIVE will represent 1.20% of the portfolio.

We will be trimming our position in Five Below into its strength today. The shares are quickly approaching our current price target of $125, and we will be locking in a great ~23% profit that was made in about five weeks' time with this trim. Accordingly, we will downgrade our rating to a Two on valuation.

Of course, we would prefer to trim if we had more shares and this position was larger, however, we cannot let its small size in the portfolio blind us from discipline to price. We are only three weeks into 2019, yet the shares have already rallied about 20% and are back at their November 2018 highs.

While we have downgraded our rating to a Two, our long-term thesis is unchanged. The company is a market-share gainer through its exciting regional to national expansion strategy, which is fueled by highly-profitable store launches with payback periods of less than a year. We would happily be buyers again on a pullback.