Forget Labubu: this ‘mystery dumpling’ stock could be next big hit

Wolfe Research’s senior analyst Spencer Hanus recommends investing in Five Below (NASDAQ: FIVE) as the viral “mystery dumpling” replaces last year’s Labubu craze.

According to him, FIVE is the undisputed heavyweight of “trend-spotting” retail, which has helped it become the primary destination for Gen Z and Millennial Moms.

Five Below stock has already rallied more than 30% this year, but Hanus believes it will rip higher from here through the remainder of 2026.

Why is Wolfe Research bullish on Five Below stock?

Hanus cited the emerging mystery dumpling mania as a key catalyst that may redefine FIVE's stock performance in 2026.

These squishy, bao-bun-shaped collectibles, packaged in miniature bamboo steamers, have erupted across TikTok, mirroring the blind-box phenomenon that sent shares of Pop Mart soaring last year.

The Wolfe Research analyst notes that “comp momentum at Five Below Inc remains the strongest in our coverage,” and recent store checks confirm the craze is only accelerating.

By securing inventory of these viral sensations early, the firm isn’t just selling a toy – it’s driving incremental foot traffic and larger “ticket” sizes.

Why? Because shoppers inevitably attach other themed items to their mystery dumpling purchases, he added.

With the viral "mystery dumpling" trend now hitting its stride, analysts see a clear path for Five Below to sustain its upward trajectory.

How high could FIVE shares fly in 2026?

Wolfe’s constructive view is further bolstered by the massive growth in digital engagement.

According to the investment firm, the latest data from Google Trends reveals search interest for FIVE roughly doubled on a year-over-year basis in March, following a 67% increase in the prior month.

In his research report, Hanus agreed that individual trends like the “Labubu” doll may be fleeting, but said the retailer’s ability to pivot seamlessly to the next big thing creates a “flywheel of virality.”

In short, even if the dumpling trend cools faster than expected, FIVE’s strategy is clearly bearing fruit, the analyst noted as he raised his price objective to $291.

His upwardly revised outlook signals potential upside of another “24%” in Five Below shares over the next 12 months.

Five Below: a high-growth story in the cautious retail sector

Beyond viral toys, FIVE shares are worth owning as the company’s fundamental growth engine is firing on all cylinders – as evidenced in a record-breaking holiday quarter featuring a 24% increase in net sales to $1.73 billion.

Meanwhile, management is aggressively expanding – with plans to open 150 net new stores this year – targeting a long-term goal of 3,500 locations.

The shift toward rounded price points and the expansion of the “Five Beyond” section are effectively capturing a broader demographic.

All in all, as FIVE penetrates new territories like the Pacific Northwest, its unique mix of extreme value and social-media-ready “newness” positions it as a rare high-growth story in a cautious retail environment.