Signal Says Buy the Dip on This Retail Stock

FIVE has short squeeze potential

Deputy Editor
Jun 21, 2023 at 11:38 AM
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The shares of Five Below Inc (NASDAQ:FIVE) are off by 6.3% this quarter, following an early-June post-earnings plunge to the $165 level. There's a silver lining for the discount retail stock, as it just pulled back to a historically bullish trendline. 
 
Five Below stock is within one standard deviation of its 160-day moving average. Per Schaeffer's Senior Quantitative Analyst Rocky White, FIVE saw three similar signals over the past three years, and was higher one month later each time, averaging a 14.5% pop. A move of similar magnitude would place the stock back near its 2023 highs.

 

FIVE Chart June 212023

A shift in the options pits could also give FIVE a lift, per the equity's 10-day put/call volume ratio of 1.58 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 87% of readings from the past 12 months. 

Short interest is inching lower, down 4.9% over the last two reporting periods. However, the 3.73 million shares sold short still make up 6.9% of Five Below stock's available float, indicating the equity could move higher still should some of this pessimism start to unwind.

 

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