It might seem extremely complicated at first glance, but investing in the stock market really isn't that difficult. All it takes is a focus on high-quality businesses, adequate diversification, and a long-term time horizon. Couple this with lots of patience, and you can get on course to generating healthy returns. 

What's more, even a fairly small sum is enough to get started. You should prioritize a few other critical tasks first, such as paying down high-interest debt and building up an emergency fund. But if, after those are taken care of, you have even $100 you're ready to invest, then I'd recommend taking a serious look at Five Below (FIVE -3.39%). 

Solid growth 

The chain's 1,252 stores focus on trendy merchandise for younger consumers, primarily at prices under $5 an item. Those stores provide a vibrant shopping experience for customers. And Five Below has been opening new locations at a rapid pace, more than quintupling its nationwide footprint over the past decade. This makes complete strategic sense, given its average return on invested capital in the first year that a store is open is greater than 100%.

From fiscal 2016 through fiscal 2021, Five Below's revenue increased by 184% and its profits grew by 288%. And management recently laid out what it called the Triple-Double vision for growth, setting out goals to double sales and earnings per share by fiscal 2025 and triple the store count to 3,500 by 2030. Expanding aggressively in highly populous states like California, Texas, Florida, New York, and Pennsylvania, as well as raising brand awareness via digital advertising and social collaborations, will support this growth. 

Five Below currently sports a market capitalization of $8 billion, making it a mid-cap stock. But if the leadership team can execute on its ambitious growth plans, this business can graduate into the ranks of the large caps. 

Recent troubles 

Despite favorable long-term prospects, Five Below is not immune to the current economy. Same-store sales, a key metric for retail businesses, fell 5.8% year over year in its fiscal second quarter, a rare occurrence for this company and probably part of the reason for the stock's poor performance this year. 

According to management, the business is dealing with three key headwinds right now. One, unsurprisingly, is inflation, which is pinching consumers' budgets and forcing them to spend more carefully. Second, now that pandemic-related restrictions have eased, consumers are once again free to spend money on things like travel and entertainment, leaving them with less to spend on the sort of products that Five Below sells. And last, the retailer faces particularly tough comparisons this year to its fiscal 2021, when revenue jumped 45.2% and net income more than doubled. 

For the current fiscal quarter, management is forecasting a same-store sales decrease of 7% to 9% versus the prior-year period. "We do not see all the headwinds just mentioned dissipating in the near term," said CEO Joel Anderson on the fiscal Q2 2022 earnings call. 

However, these issues aren't specific to Five Below. They are plaguing much of the retail sector. And with the Federal Reserve continuing to aggressively hike interest rates, the headwinds could intensify before they get better. But investors who can look past the short-term uncertainty and focus on the big picture might want to add Five Below to their portfolios. The growth potential that management sees is huge, and it could drive the stock higher over the long term.

Current valuation 

With its shares down 31% in 2022, Five Below now has a price-to-earnings ratio of 34. That's well below its trailing five-year average of 48. Nonetheless, it has produced an outstanding return of 153% over the past five years, nearly tripling the 56% total return of the S&P 500 index during the same period. 

To be clear, Five Below trades at a premium to other popular retailers like Dollar General and Walmart. However, it has posted much faster growth in recent years. And as a result, it might be worth paying up for the stock if you believe it will once again get back on its positive trajectory once macroeconomic conditions improve.