19. Chewy, Inc. (NYSE:CHWY)
Chewy, Inc. (NYSE:CHWY) was one of the stocks on which Jim Cramer shared his take, explaining that dot-com analogies do not hold up in this market. When a caller asked if they should buy more, sell, or hold their position in the stock, Cramer remarked:
Okay, I’m glad you bring this up. This is another one, there’s a bunch of stocks that are like this. They’re high-growth companies that did not necessarily blow the doors off their number and are in retail. And because they’re retail, people feel that you can’t own retail because of the war. So this is definitely a hurt-by-war story, and I think the President should realize they’re becoming more and more hurt by war companies, and that’s what it is. Until the war ends, I can’t tell you to buy Chewy.
Chewy, Inc. (NYSE:CHWY) runs an online marketplace for pet food, supplies, medications, and health products, along with a range of pet services. Cramer was bullish on the stock during the March 26 episode, as he commented:
Yesterday morning, we got a solid set of results from Chewy, the online pet supply retailer, and the stock immediately jumped 13% in response, in part because it had been beaten down for the past 10 months, so it didn’t take all that much to generate a rebound… What really matters, though, is that Chewy gave solid guidance for the current quarter and a very bullish full year forecast…
You wouldn’t appreciate why this was a good quarter for Chewy if you only looked at the analyst reactions to the report, because most lowered their price targets… But honestly, I wouldn’t read too much into that… They were just using the quarter as an excuse to get their targets more in line with reality… The new average price target stands at $40 and change. That’s still up more than 50% from where the stock’s currently trading. Instead, I think Chewy’s 13% gain yesterday, which was followed by another 1.7% gain today in a really terrible market, was the right read on the quarter. This was a solid set of numbers from Chewy with a better outlook and, perhaps most importantly, a reaffirmation of the company’s long-term plan, which will lead to continued market share growth and steadily expanding profits.
Here’s the bottom line: I know Chewy’s had a rough run for the past six months, but here, with the stock selling for just 17 times this year’s earnings estimates, with this kind of growth, it’s the cheapest it’s ever been. I think you’re getting a great chance to do some buying even after yesterday’s big bounce. Chewy’s story remains firmly on track, and I bet yesterday’s move is merely the beginning of a longer and larger rally.
