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Ollies Bargain Outlet Holdings Inc (NASDAQ:OLLI) and Five Below (NASDAQ:FIVE) will be key beneficiaries of the trade down, with consumers turning to value as savings dwindle, BofA analysts told investors in a note Wednesday.
The analysts raised the firm’s price target on OLLI to $70 from $68 per share and on FIVE to $242 from $220.
“U.S. consumers amassed over $2tn of excess savings through the pandemic,” wrote the analysts. “Continued savings drawdown should again provide a lift to spending this year, but as these savings are further worked down, we expect more consumers will need to shift into the bargain channel.”
The analysts added that OLLI is uniquely positioned to benefit from trade-down over the coming years, with its prices averaging 35% to 40% lower than Walmart’s and Amazon’s.
Meanwhile, they stated that although FIVE entirely sells discretionary items, they “still see it as a key trade-down destination given its value-orientation — roughly 85% of its products are $5 or less.”
