Parents stocking up on back-to-school items might also want to pick up a few back-to-school stocks.

Bank of America Merrill Lynch on Monday had an upbeat take on three retailers where parents are likely to be looking for start-of-school buys. 

Five Below Inc (NASDAQ:FIVE)

As a discount retailer with lots of Chinese merchandise, Five Below has seen its shares underperform due to tariff fears.

Analyst David Buckley said in a Monday note that the retailer's response has been to try to offset tariffs by going five and above in limited cases by offering a few products that are more than the $5 limit that gives the chain its name.

The company has said it was — even before tariffs — already testing higher-priced offerings.

The company is calling the higher-priced sections it’s testing “Just Wow” and “Ten Below.” The more expensive items are mostly in the technology and room categories.

“Even though FIVE’s strategy to take additional pricing to offset tariffs could lead to fewer units per transaction, its treasure hunt-like shopping experience will continue to offer one of the best value propositions in the marketplace,” Buckley said. 

BofA reiterated a Buy rating on Five Below with a $150 price objective. 

Children’s Place Inc (NASDAQ:PLCE)

The bankruptcy of former competitor Gymboree is likely to bolster The Children’s Place stores, BofA analyst Lorraine Hutchinson said in a Monday note after BofA's back-to-school mall tour at Garden State Plaza in Paramus, New Jersey.  

The Paramus Children’s Place seemed to benefit in the first quarter from the closure of a Gymboree store next door, the analyst said.

Children’s Place said in March that it was taking the opportunity presented by the closing of Gymboree stores to open new Children’s Place stores in several locations. It also bought the rights to the Gymboree brand, which it plans to re-launch in 2020 in Children’s Place stores.

Hutchinson said Children’s Place is now able to compete more rationally on price without having to discount to match rival Gymboree, and that should be good for the stock. 

“We think PLCE’s ability to successfully take pricing is a key focus of investors now that GYMB is out of the marketplace."

BofA reiterated a Neutral rating on Children's Place with a $115 price objective. 

Urban Outfitters, Inc. (NASDAQ:URBN)

Urban Outfitters has a mix of trending and more traditional items in its back-to-school offerings, Hutchinson said. 

The Anthropologie brand is adding plus sizes and a ship-to-store service, the analyst said. 

The spring launch of plus sizes was successful enough to lead to in-store testing, and Hutchinson said it is driving incremental sales.

Ship-to-store — or buying online and picking up in the store — will be fully rolled out this holiday after driving strong traffic in test stores, she said. 

“Both concepts’ store managers viewed the product assortment as back on track and we think early trends are improving,” the analyst said. 

BofA reiterated a Buy rating on Urban Outfitters with a $33 price objective. 

Price Action

All three retailers’ stocks appeared to be riding general fears about the U.S.-China trade war lower along with much of the broader market on Monday.

Five Below shares were down 2.59% at the close, while Children’s Place stock was off 3.28%. Urban Outfitters shares were down 0.81%. 

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