Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Now's The Time To Load Up On Chewy, A Perfect Stock For Pet And Profit Lovers

By Andy HechtStock MarketsSep 14, 2021 06:09AM ET
www.investing.com/analysis/nows-the-time-to-load-up-on-chewy-a-perfect-stock-for-pet-and-profit-lovers-200601835
Now's The Time To Load Up On Chewy, A Perfect Stock For Pet And Profit Lovers
By Andy Hecht   |  Sep 14, 2021 06:09AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

This article was written exclusively for Investing.com.

  • Incredible rise from the March 2020 low to the February 2021 high
  • Chewy’s customer service puts it at the top of the pet supplies business
  • Correction from February through May 2021; a rally to a lower high in August
  • Q2 earnings: Disappointing, but a rare miss
  • Revenue growth, shrinking losses say buy the dip; Most analysts are bullish

Chewy (NYSE:CHWY), the Dania Beach, Florida-based e-commerce business that provides pet foods and treats, pet supplies, pet medications, and other pet-health products for dogs, cats, fish, birds, small pets, horses, and reptiles via its chewy.com retail website has been in business since 2010. CHWY offers approximately 70,000 products from 2,500 partner brands.

The global pandemic that began in 2020 lifted profits for many online companies, and Chewy is no exception. At $73.64 per share as of yesterday's close, CHWY’s market cap was around the $30.8 billion level.

On average, the company trades over 3.3 million shares each day. Chewy is a highly volatile stock. CHWY opened for trading in June 2019 at $37.60 per share. The range since its listing has been from $20.62 to $120.00.

Chewy recently dropped after its Q2 earnings disappointed as they came in below market expectations. However, the decline could be a buying opportunity for the company that shows pet owners how much they care, with customer service that is more than a notch above retail competitors.

Incredible rise from the March 2020 low to the February 2021 high

CHWY shares experienced a parabolic rise following the pandemic-inspired Mar. 9, 2020, $20.62 low.

CHWY Weekly
CHWY Weekly

Source: Barchart

As the chart highlights, CHWY shares rose nearly five times to a high of $120 by mid-February 2021. The global pandemic created an almost perfect bullish storm for the e-commerce pet supplies company as the customer base grew. Delivery of pet food, medicines, and supplies became a must during the height of the pandemic.

Chewy’s customer service puts it at the top of the pet supplies business

Customer service is critical in building a loyal customer base. From personal experience, I can attest that Chewy is a cut above in the e-commerce sector.

Our cat Gia requires a special diet that needs a veterinarian’s prescription. We began ordering from Chewy sometime in late 2020. The delivery has been swift and efficient.

Moreover, when the prescription ran out and needed renewal, CHWY was on point in assisting us, so Gia did not go without her required nutrients. Furthermore, each time we call, the representative personalizes the conversation, asking how Gia is doing and if they can help.

Friends and colleagues have had an equally pleasant experience with Chewy’s approach to customer service. One friend sadly lost their pet over the past year. When they called to cancel their food delivery, the company not only expressed heartfelt sympathy for the loss of a family member, they went one step beyond.

The next day, a package arrived with flowers and a sympathy card. Few companies go the extra mile like Chewy.

Correction from February through May 2021; a rally to a lower high in August

CHWY shares peaked at $120 in February 2021. The parabolic move ran out of upside steam, sending the stock to a low of $64.08 on May 13.

CHWY Daily
CHWY Daily

Source: Barchart

As the chart shows, the stock almost halved in value from mid-February through mid-May. As social distancing guidelines eased with COVID-19 vaccinations, more people went back to their local store to purchase pet supplies. Meanwhile, the stock recovered, moving to a lower high at $97.74 on Aug. 13.

CHWY’s kind attention to service likely helped retain many new customers, pushing the stock higher. However, the shares ran out of upside steam, just shy of the $100 per share level. After the company released its second-quarter earnings, the stock plunged.

Q2 earnings: Disappointing, but a rare miss

The consensus forecast for the company’s Q3 fiscal 2021 earnings was for CHWY to lose two cents per share. A disappointing four cents per share loss sent the stock lower, to its most recent low at $71.93 on Sept. 13. Technical support now stands at the May 13 $64.08 low.

CHWY Earnings
CHWY Earnings

Source: Yahoo Finance

The chart shows that CHWY had consistently beaten consensus earnings estimates from Q4 2020 through Q2 2021. The miss in Q3 sent the stock substantially lower.

Nonetheless, I view the recent decline as a buying opportunity for the stock.

Revenue growth, shrinking losses say buy the dip; Most analysts are bullish

A survey of eighteen analysts on Yahoo Finance has an average price target of $93.93 for CHWY shares, with forecasts ranging from $67.75 to $133 per share. At below $74 on Sept. 13, the stock was trading at the low end of the range and over 20% below the consensus forecast.

Wall Street companies rate CHWY shares anywhere from neutral and hold to outperform at the current price level.

Source: Yahoo Finance

The chart shows impressive revenue growth from 2018 through 2021 and a declining loss. The current trend implies CHWY will earn steady profits over the coming quarters and years.

Similarly, of 20 analysts polled by Investing.com, the majority gave it an 'Outperform' rating.

CHWY Consensus Estimates
CHWY Consensus Estimates

Chart: Investing.com

Among respondants the average 12-month price target was $95.73, for a 30% upside.

When it comes to investing, buying the companies you have experience with is often a profitable approach. Because of my experience with CHWY I added the company to our portfolio.

I will buy more CHWY shares on a scale-down basis during the current correction. We love our pets and we love the companies that care about their customers and their furry friends.

Now's The Time To Load Up On Chewy, A Perfect Stock For Pet And Profit Lovers
 

Related Articles

Now's The Time To Load Up On Chewy, A Perfect Stock For Pet And Profit Lovers

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
PM Coffee
PM_Coffee Sep 14, 2021 2:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
As food inflation starts to skyrocket (Kroger is already warning).. I can't see people wanting to spend more on their pets. In fact I see them downgrading their food to cheaper brands.. unless the bet here is people start eating dog food.
Vivi Shiku
Vivi Shiku Sep 14, 2021 11:59AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
am new here,someone teach how to trade
Buhari Dukawa
Buhari Dukawa Sep 14, 2021 11:38AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thanks
randy dence
randy dence Sep 14, 2021 7:55AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
One word...woof
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email