Five Below Inc (NASDAQ:FIVE) yesterday announced holiday sales for the quarter-to-date through Jan. 7. The results showed same-store sales rose 0.9%, and were uplifting enough that no less than three analysts hiked their price targets.
Shares of Five Below stock were last seen 0.9% higher to trade at $188.55, adding to a more than 58% six-month lead. This pop puts FIVE near its highest level since January 2022. What's more, the equity is flashing a historically bullish signal that could push the shares even higher.
Five Below stock's recent peak comes amid historically low implied volatility (IV), which has been a bullish combination for the equity in the past. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, five other signals occurred in the last five years when the security was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower. This is currently the case with FIVE's SVI of 43%, which stands in the 7th percentile of its 12-month range.
White's data shows that one month after these signals, the stock was higher 60% of the time, averaging a 4.8% return for that period. From its current perch, a move of similar magnitude would place Five Below stock above $197 per share.
Circling back to analyst sentiment, the highest of the aforementioned bull notes comes from BofA Global Research, which raised its price objective to $220 from $215. The 12-month consensus price target of $196 is a 3.9% premium to FIVE's current perch, and 16 of 17 covering brokerages recommend a "buy" or better.
Short sellers are exiting their positions -- short interest is down 2.6% over the most recent reporting period -- so a short covering rally is also in play. The 4.23 million shares sold short make up 7.3% of the stock's available float, and it would take almost a full week for shorts to buy back their bearish bets, at Five Below stock's average pace of trading.
An unwinding of pessimism could also help the shares. This is per FIVE's Schaeffer's put/call open interest ratio (SOIR) of 1.35, which stands higher than 89% of annual readings. In other words, short-term options traders have rarely been more put-biased.