Keep buying Five Below as it leans into squishy dumplings, says analyst

Wolfe Research believes that the latest growth driver for Five Below comes in the form of a squishy toy dumpling. In a Tuesday note to clients, analyst Spencer Hanus reiterated his outperform rating on the off-price retail chain. Hanus' new price target of $291 price target implies upside of 26% from where shares of Five Below closed Monday afternoon. The stock has surged 21% this year. FIVE YTD mountain Five Below shares in 2026 In the note, Hanus pointed to the skyrocketing popularity of "squish" toys, including the dumplings, as an "important and underappreciated driver of FIVE's momentum." Other toys fitting into this trend include NeeDoh and Taba, and their exploding virality on TikTok has been boosting foot traffic to Five Below in recent month. Just last week, Five Below put up a notice that it was trying to put more mystery dumplings back in stock and limiting customers to just three items per person, per day. "The 'squish' trend is also helping accelerate momentum at FIVE, as product scarcity is driving repeat visits and new occasions. As a result, 1Q is set up for a significant beat, with [same-store sales] in the high teens to low 20% vs. consensus at +16%. We continue to expect strong flow through and view 2Q estimates as too low," Hanus said. "Sustainability is increasingly on our mind, but we are still confident in FIVE's strategy and ability to capitalize on trends." Hanus noted that while management set reasonable expectations, he still expects executives to leave room to beat and raise guidance throughout the year. Both new and existing customer sales have accelerated at Five Below, as consumers are coming to stores seeking viral items and returning as new trends emerge, the analyst added. "This helps fade concerns about comping the comp, as we're still early in the squish trend with room for upside or a new viral trend emerging for FIVE to capitalize on. The breadth of the momentum remains key as consumer demand continues to support the higher [average unit retail] throughout the box," he wrote. Five Below consistently ranks in Wolfe's top bucket of monthly in-store checks, driven by fresh assortment, cleanliness and customer energy, the researcher said.