Cash-Rich Stocks to Buy: Five Below (FIVE)
Cash-to-Market Cap: 5.6%
Five Below Inc (NASDAQ:FIVE) sells discount merchandise including to teens and preteens. It finished Q4 2016 with $164.4 million in cash and no long-term debt.
In April, I recommended Five Below as one of the 10 best stocks to own for the next decade. Its management includes experienced retailers who know how to grow a chain’s inventory of stores. Five Below is opening 100 stores in 2017 and 2,000 in the next 10 years or so, and I believe the $5-or-less concept should continue to attract the younger demographic.
Near-term, Five Below is benefiting from the fidget spinner, a fad-like product the retailer just can’t keep in stock. New shipments of the toy are said to be selling out in as little as seven minutes.
“Supply needs to improve to fully capitalize on this trend and we hope to hear more from mgmt. on this topic,” Jefferies analyst Daniel Binder said recently. “Store managers we spoke to told us that customers coming in for this product buy other items even if fidget spinners are not available.”
Five Below had no stores in California until April, when it opened nine, then another three in May. CEO Joel Anderson says the state will ultimately become its biggest market ahead of Texas, its current store leader.
I like this retailer’s chances for long-term success.