Lots to talk about today… we’ll start with a quick teaser solution, then move on to some big picture thoughts, updates on the changes in my portfolio (a couple small buys), and some other little updates and cogitations.
The teaser comes from Mike Cintolo’s Cabot Growth Investor, which is just what it sounds like: a newsletter that picks growth stocks. Cabot’s strategy tends to focus on momentum stocks and rapid growth in most of their newsletters, so the stocks they teaser are often expensive-looking, and this one is touted as “The Next Amazon.”
These are the clues we get:
“It’s already growing its earnings 81 times faster than Amazon and has outperformed it by 25% over the past two years.
“Here’s why it could jump 50% on earnings and double soon after that….
“That’s because the company’s low price point products appeal to the fastest growing demographic on the planet: millennials.
“You see …
“Unlike Amazon, which sells everything under the sun, this company has carefully targeted its market to teens, pre-teens and their parents—selling them must-have, in demand, fashionable items along with seasonal must-haves for Easter, Halloween, Christmas and more.
“But time is running out on getting in on the ground floor here.
“As we head into the holidays, orders are starting to pour in from all over the world. The company’s cash register is starting to work overtime.”
So… hoodat? We’re keeping it short and simple on the teaser solution front today, so I’ll just tell you that this must be: Five Below (FIVE)
Which has been trying to essentially ride the dollar store craze while also adding the old “fast fashion” secret sauce from the Target of the 1990s — the stores feature things that cost less than $5, and they focus on seasonal goodies and, well, fad and fashion-driven semi-disposable junk. Like fidget spinners and ugly Christmas sweaters.
And it’s been working — they’re growing fast, they’re expanding the store count rapidly, and analysts see pretty dramatic earnings growth in the 20% neighborhood for as far as the eye can see… the only problem, really, is that they’re expensive. That’s not uncommon for fashionable retailers who are rapidly building out stores and showing dramatic top-line growth, such stocks often get expensive (remember Chipotle?) … and it works as long as it works, as long as those stores can keep getting added without hurting the same store ...