Five Below (FIVE) Slipped in Q1 on Earnings Miss and Cautious Guidance

Wasatch Global Investors, an asset management company, released its “Wasatch U.S. Select Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. During the first quarter, the strategy gained but underperformed the Russell 3000 Growth Index benchmark, which was up 11.23%. Holdings in information technology (IT) and financials sectors detracted from the relative performance of the strategy, on the other hand, holdings in healthcare and consumer-discretionary sectors outperformed and contributed to the performance of the strategy in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Wasatch U.S. Select Strategy highlighted stocks like Five Below, Inc. (NASDAQ:FIVE), in the first quarter 2024 investor letter. Five Below, Inc. (NASDAQ:FIVE) is a US-based specialty value retailer. The one-month return of Five Below, Inc. (NASDAQ:FIVE) was -14.57%, and its shares lost 39.97% of their value over the last 52 weeks. On June 17, 2024, Five Below, Inc. (NASDAQ:FIVE) stock closed at $114.31 per share with a market capitalization of $6.295 billion.

Wasatch U.S. Select Strategy stated the following regarding Five Below, Inc. (NASDAQ:FIVE) in its first quarter 2024 investor letter:

"Discount retailer Five Below, Inc. (NASDAQ:FIVE) also detracted. Shares slid after the company announced earnings-per-share growth that fell short of consensus expectations. The company also lowered 2024 full-year earnings guidance. The earnings miss and lower guidance were due largely to increased “shrink,” or stolen goods, from Five Below’s stores and to extra costs Five Below will undertake to mitigate shrink in the future. The company’s management team had communicated previously about issues around shrink, and we believe the higher expenses will be transitory. Over the long term, we continue to like the company. New stores continue to be very profitable, and we anticipate an acceleration in openings next year."

A family happily shopping for everyday items in a specialty retail store.

Five Below, Inc. (NASDAQ:FIVE) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Five Below, Inc. (NASDAQ:FIVE) at the end of the first quarter which was 33 in the previous quarter. Five Below, Inc.'s (NASDAQ:FIVE) sales climbed by 11.8% to $811.9 million in the first quarter of 2024 from $726.2 million in the first quarter of 2023. While we acknowledge the potential of Five Below, Inc. (NASDAQ:FIVE) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Five Below, Inc. (NASDAQ:FIVE) and shared Carillon Eagle Small Cap Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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