This article is written exclusively for Investing.com.
Incredible rise from March 2020 low to February 2021 high
Chewy's customer service puts it at the top of the pet supplies industry
Correction from February to May 2021; a rally to a lower high in August
Second quarter profit: disappointing, but a rare miss
Revenue Growth, Shrinking Losses Say Buy the Dip; Most Analysts Are Bullish
Chewy (NYSE:), the Dania Beach, Florida-based e-commerce company that provides pet food and treats, pet supplies, pet medications and other pet health products for dogs, cats, fish, birds, small pets , horses and reptiles through its shopping website Chewy.com has been operating since 2010. CHWY offers approximately 70,000 products from 2,500 partner brands.
The global pandemic that began in 2020 boosted profits for many online businesses, and Chewy is no exception. At $73.64 per share as of yesterday's close, CHWY's market cap was near the $30.8 billion level.
On average, the company trades more than 3.3 million shares every day. Chewy is a highly volatile stock. CHWY opened for trading in June 2019 at $37.60 per share. The range since the listing has been from $20.62 to $120.00.
Chewy recently fell after being disappointed to come in below market expectations. However, the drop could be a buying opportunity for the company that shows pet owners how much they care, with customer service far above retail competition. to its February 2021 high
CHWY shares saw a parabolic surge after the pandemic-inspired March 9, 2020, $20.62 low.
Source: bar chart
As the chart shows, CHWY stock rose nearly five times to a high of $120 by mid-February 2021. The global pandemic created a near-perfect bullish storm for the pet supplies e-commerce company as its customer base grew. The supply of food, medicine and supplies for pets became a must during the height of the pandemic. Customer service is critical in building a loyal customer base. From personal experience, I can confirm that Chewy is a top performer in the e-commerce industry.
Our cat Gia requires a special diet that is required by a vet's prescription. We started ordering from Chewy sometime in late 2020. Delivery was fast and efficient.
Plus, when the recipe ran out and had to be renewed, CHWY was about to help us, so Gia didn't go without her needed nutrients. In addition, every time we call, the rep personalizes the conversation, asking how Gia is doing and if they can help.
Friends and colleagues have had an equally enjoyable experience with Chewy's approach to customer service. A friend unfortunately lost his pet last year. When they called to cancel their food delivery, the company not only expressed its sincere condolences on the loss of a family member, but went one step further.
The next day a package with flowers and a condolence card arrived. Few companies go one step further than Chewy.
Correction from February to May 2021; rallied to a lower high in August
CHWY shares peaked at $120 in February 2021. The parabolic move turned on its head, pushing the stock to a low of $64.08 on May 13 went.
Source: bar chart
As the chart shows, the value of the stock almost halved from mid-February to mid-May. As social distancing guidelines with COVID-19 vaccinations relaxed, more people went back to their local store to buy pet supplies. Meanwhile, the stock recovered and reached a lower high at $97.74 on August 13.
CHWY's kind attention to service probably helped keep many new customers, increasing inventory. However, the stock had lost its upward momentum, just below the $100 per share level. The stock plunged after the company released its second quarter results. the gain was for CHWY to lose two cents a share. A disappointing loss of four cents a share sent the stock plunge to its most recent low of $71.93 on Sept. 13. Tech support is now at the May 13 low of $64.08.
Source: Yahoo (NASDAQ:) Finance
The chart shows that CHWY had consistently outperformed consensus expectations for earnings from the fourth quarter of 2020 through the second quarter of 2021. The miss in the third quarter sent the stock significantly lower.
Yet I see the recent decline as a buying opportunity for the stock.
Revenue growth, shrinking losses say buy the dip; Most Analysts Are Optimistic
A survey of eighteen analysts on Yahoo Finance has an average price target of $93.93 for CHWY stocks, with forecasts ranging from $67.75 to $133 per share. At less than $74 on Sept. 13, the stock was trading at the low end of the range and more than 20% below the consensus forecast.
Wall Street companies rate CHWY stocks anywhere from neutral and holding to better than at current price levels.
Source: Yahoo Finance
The chart shows impressive revenue growth from 2018 to 2021 and a declining loss. The current trend holds that CHWY will make steady gains in the coming quarters and years.
Also of the 20 analysts surveyed by Investing.com, the majority gave it an "Outperform" rating.
Chart: Investing.com
Among respondents, the average 12-month price target was $95.73, for a 30% increase.
When it comes to investing, buying the companies you have experience with is often a profitable approach. Because of my experience with CHWY, I have added the company to our portfolio.
I will be buying more CHWY stocks on a tapering basis during the current correction. We love our pets and we love the companies that care about their customers and their furry friends.
