After experiencing a drop post-earnings, this stock emerges as a top growth pick for investors in 2024.

If you’re looking for a retail concept that’s popular with teens and preteens, look no further than Five Below. This fast-growing company, listed on the NASDAQ as FIVE, is gaining ground across the country with its assortment of products at affordable prices. However, after the company reported its full-year financial results for 2023, investors were disappointed to see Five Below stock drop by 15%.

But for patient investors with a long-term focus, these pullbacks could present great opportunities. Five Below has a solid investment thesis – the company aims to open 2,000 new retail locations by 2030, with these locations paying for themselves in about a year. As the company’s cash flow grows, so too should its stock price.

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Over the past decade, Five Below has seen substantial growth in its number of locations, overall sales, and net income. By the end of 2023, the company had over $460 million in cash and no debt, a significant improvement from its financial position in 2013.

Looking ahead to 2024 and beyond, Five Below continues its expansion strategy, maintaining a profitable business model even as it adds new locations. The company has introduced a section called “Five Beyond,” which allows it to sell merchandise at any price, mitigating concerns about sticking to items under $5 during inflationary times.

With plans to have more than 3,500 locations by 2030, Five Below could become a cash-flow machine with no debt obligations. This opens up opportunities for the company to return cash to shareholders through dividends or share repurchases. At just 3 times its trailing sales, Five Below is also reasonably priced for investors seeking growth at a reasonable price.

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So, should you invest $1,000 in Five Below right now? While it’s not among the 10 best stocks identified by the Motley Fool Stock Advisor team, Five Below still presents promising growth potential. With a solid business model, growing cash flow, and expansion plans, Five Below could be a top growth stock to watch in 2024 and beyond.

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