3 Reasons Five Below Is a Must-Buy for Long-Term Investors

Core Viewpoint - Five Below is a retail chain with significant growth potential, appealing to teen and preteen shoppers, and is considered a strong long-term investment opportunity through at least 2030 [1] Group 1: Company Growth and Expansion - Five Below operates 1,749 locations as of Q3 2024, having nearly doubled from 900 locations at the end of 2019 [1][3] - The company aims to exceed 3,500 locations in the future, with a potential opening rate of 100 new stores annually through 2030 [4] - Five Below's earnings per share (EPS) have increased by over 50% in the last five years, indicating strong profit growth [8] Group 2: Investment Philosophy - Peter Lynch advocates for investing in familiar brands, suggesting that Five Below's popularity among youth makes it a compelling investment [3] - Warren Buffett's investment principle of never losing money aligns with the belief that Five Below's stock is unlikely to result in losses for long-term investors [6] - Charlie Munger emphasizes the importance of patience in investing, suggesting that despite short-term stock price declines, the company's strong fundamentals will lead to recovery and growth [10][12] Group 3: Financial Performance - Five Below's stores have a payback period of about one year, meaning a new store costing $400,000 should generate that amount in profit within its first year [8] - The company's revenue has doubled over the past five years, supporting the notion that profits are on an upward trajectory [9] - The expectation is that Five Below's profits could double by 2030, with management likely reinvesting profits into growth or returning them to shareholders [12]