5 Best Under-The-Radar Stocks To Buy According To Hedge Funds

In this article, we will take a look at the 5 best under-the-radar stocks to buy according to hedge funds. To see more such companies, go to 10 Best Under-The-Radar Stocks To Buy According To Hedge Funds.

5. Five Below, Inc. (NASDAQ:FIVE)

Number of Hedge Fund Holders: 28

Pennsylvania-based Five Below, Inc. (NASDAQ:FIVE) operates discount stores which sell most of their products under $5. As recession fears mount and inflation increases, consumers are more likely to visit discount stores. Last month, Bank of America counted Five Below, Inc. (NASDAQ:FIVE) among the three stocks it recommends to investors for 2023.

“Within our coverage universe, these are the companies with the best combination of company-specific growth initiatives, a relatively favorable macro backdrop, and attractive valuation,” BofA said.

As of the end of the second quarter of 2022, Five Below, Inc. (NASDAQ:FIVE) operated about 1,200 stores across 40 states in the US. The company’s revenue has increased at a 17% CAGR in the past five years. The company’s stores have attractive products for teens and tweens.

As of the end of the third quarter of last year, 28 hedge funds tracked by Insider Monkey had stakes in the company, compared to 31 funds in the previous quarter.

Wasatch Global Investors made the following comment about Five Below, Inc. (NASDAQ:FIVE) in its Q3 2022 investor letter:

“Another top contributor was Five Below, Inc. (NASDAQ:FIVE). The company operates a chain of specialty discount stores aimed at “tweens” and teens that sell products that cost up to $5, plus a small assortment of products priced from $6 to $25. While the company lowered guidance for the full year and missed consensus estimates in its most recent quarterly earnings report, guidance for the all-important fourth-quarter holiday season included some positive takeaways. Management also said it expects operating margin expansion due to tight expense controls. In addition, the company is accelerating new store openings, following a pandemic-driven slowdown and construction challenges, which we think will provide future revenue growth.”