Shares of teen and tween retailer Five Below Inc (FIVE) jumped 13% on Friday after a blowout quarter leaving the stock at around the $130.89 mark.
The stock hit a high of $136.13 on Friday, and was trading about 60 times trailing 12 months earnings per share of $2.23 in late afternoon. On Thursday, executives touted an aggressive expansion of their stores and sales growth across all categories of seasonal and trend-driven products, raising full year sales guidance from $1.528 billion to $1.540 billion.
Trading volume late Friday reached 4.6 million, about three times the 15 day average of 1.16 million shares, pushing the stock's Relative Strength Index above 79 and into overbought territory.
James "Rev Shark" DePorre, CEO and founder of Shark Asset Management and a Real Money contributor, said Friday's sudden jump in stock price for the discount retailer was indicative of positive sentiment despite a ratio of more stock losers than gainers for the day, with about double the number of stocks reaching 12-month lows than highs.
While differentiated from other dollar value stores and the benefit of stock price near all time highs, DePorre continued that the stock might be due a period of consolidation before another event will either sending it up or down.
"The spike up today seems to be a slight overreaction because there is an inclination to chase momentum," DePorre said. " If you look at last quarter there was a similar spike and then the stock traded in a range for a while. I would not be surprised to see that pattern of price action repeat."
A similar 20% plus spike in the stock price in June to over $100 was followed by a lengthy period of the stock staying within a range before the second quarter earnings release caused another spike.
"I'm keeping FIVE on the radar, but will look for entry after it consolidates a bit," DePorre wrote.
The 15-year-old Philadelphia company added 34 of 67 new stores of the first half of the year in the second quarter, and plans to open more than 30 additional stores in 2018 in the U.S.