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A Great Growth Stock With Lots of Upside

By John Reeves – Updated Apr 7, 2017 at 12:47PM

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The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics around the investing world.

John and David look for companies with long growth runways. It looks like discount teen retailer Five Below fits that description. Dave's daughter brought the company to his attention about a month ago. Since then, he's been digging into the numbers. The company ended the second quarter with 226 stores and believes it can open more than 2,000 in the United States. Improving margins across a growing store base is a great recipe for growing earnings. There's plenty of competition out there from traditional discount retailers like Dollar General or Dollar Tree. And there's also the ever-present Target and Wal-Mart. But what separated Five Below from the others is its focus on the things that teens and pre-teens are looking for. It's a great group to serve, and Five Below looks to have what it takes to continue to grow and earn excellent returns on invested capital over that time.

To learn about two retailers with especially good prospects, we invite you to take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform, and how they’re planning to ride the waves of retail's changing tide. You can access it by clicking here.

David Meier, John Reeves, and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Target Corporation Stock Quote
Target Corporation
$148.39 (-2.24%) $-3.40
Walmart Stock Quote
$129.70 (-1.93%) $-2.55
Dollar Tree, Inc. Stock Quote
Dollar Tree, Inc.
$136.10 (-0.54%) $0.74
Dollar General Corporation Stock Quote
Dollar General Corporation
$239.86 (0.16%) $0.39
Five Below, Inc. Stock Quote
Five Below, Inc.
$137.67 (-0.53%) $0.73

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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