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Is CHWY Stock a Solid Long Term Investment?


People often wonder what they can do when it comes to making purchases in the stock market in order to set themselves up for a positive financial outcome years down the road. It's not exactly an easy prospect to figure out, especially when you consider the fact that the stock market is easily one of the most volatile methods of making money in existence. After all, it isn't exactly like you have any real level of security involved when you make a purchase on the stock market. That stock might do exceptionally well or it may completely fall apart. The truth of the matter is that you often don't know how it's going to play out until it's all said and done. As a result, you end up trying to make the best choices that you can possibly make in hopes of landing a few really good stocks that are perfect long-term options. Of course, these long-term stocks are usually things that you try to keep on the safe side. While it's okay to take a risk here and there with the stock market, you don't necessarily want your long-term stock options to be especially risky. That means sticking with stocks that are more than likely going to perform in the way that you think they will. One potential option involves Chewy, the pet company which is traded publicly as CHWY.

Is This a Good Option for a Long-Term Stock?

There are a lot of things about this particular stock that make it stand out, not the least of which involves the fact that they specialize in products such as pet food, toys and even prescription medications that you can get for your pet. That fact alone means that they're likely to be in high demand because they are in a particular field that does a lot of business on an annual basis. In fact, they would have to be doing something very wrong in order for their business not to be successful. A lot of people own pets and as a result, many of them are looking for a way to provide for those pets without ever leaving the comfort of their own home. A business like Chewy that is run entirely online and delivers products to your front door is a near-perfect solution. That fact was never driven home more than throughout the course of the pandemic. As a matter of fact, their business absolutely soared during the height of the pandemic because people were using them to get their pets’ supplies without having to go out and about in order to do so. The question is, is this something that is likely to continue in the long-term or is it simply a knee-jerk reaction that happened as a direct result of the pandemic and nothing more? That is the question that has to be fully answered before you know whether or not this is a good long-term stock option.

The History Behind the Company

In order to figure this out, it's important to get a little bit of history about the company itself. They went public in 2019 and since then, their stock has performed exceptionally well. While it has performed better at times than at others (like virtually every other stock that ever existed), its overall performance has been rather exceptional. When the company first went public, they were selling shares of stock for $22 each. Recently, that same stock was selling for roughly $84 a share. Obviously, that is a significant increase and it's one that's worth paying attention to. It's also worth noting that the company is starting to add more services to the types of things that it provides to pet owners, something that could genuinely increase the amount of business they're capable of doing. You already know that they provide a service that fills prescriptions for pets and delivers those prescriptions to your door. However, they're quickly becoming known as something of a health and wellness company for your pet. Think about the trend that exists where people work with someone who specializes in herbal remedies in order to find the best herbal treatments for their condition, doing everything they can to be as healthy as possible while simultaneously using natural products instead of prescription medications. This is popular because it's all natural and frequently has far fewer side effects than prescription medications. The same thing is true for your pet. If you want your pet to be as healthy as possible and live their best life, it might be possible to utilize many of these same techniques that are specially made for cats and dogs in order to allow them to be healthy without having them on so many prescription medications that could potentially cause harm. This marks the first time that Chewy has really examined a new area of business since they opened and so far, it looks like they're making great strides in this particular department. The reason it matters in this context is because it has the potential to increase their bottom line. If it works, that means that your stock is likely to go up in the long-term.

By the Numbers

Of course, no one in their right mind would even consider purchasing a long-term stock without looking at a company's financial sheet first. In this particular case, it looks pretty good. As a matter of fact, the company's overall finances are up more than 32% from this time last year, totaling approximately $2.14 billion in sales. Even more impressive, business is up 46% over the same quarter from last year. That's saying a lot, especially when you consider the fact that they were doing more business than ever at the height of the pandemic, which would have been about this time last year. That proves that they have staying power, but it doesn't necessarily prove that the stock itself is always capable of performing at a high level. In order to determine whether or not that is a possibility, a little more research needs to be done.

Current Conditions

As previously mentioned, the stock market is a difficult place to gauge. The only thing that's ever really consistent is that it changes minute-to-minute. Even though Chewy stock seems solid, it's not any more exempt from this rule than anything else that's publicly traded. As a result, it has seen a recent decline in its stock, largely because the stock market was reacting to the hopes that once a vaccine came along, the whole world would go back to doing business as usual and everything would be exactly as it was before the pandemic ever hit. Of course, any stock that has seen such a surge in growth during the pandemic is going to experience something of a whiplash effect upon news that such events might be coming to an end. The truth of the matter is that it's probably going to be some time before the pandemic actually comes to an end. Until then, it's likely that there will be times when things are looking more positive than others and when consumers feel a bit more hopeful about getting out and about then they do at other times. That said, it is highly unlikely that the effectiveness of Chewy stock is going to remain linked to the pandemic for any length of time whatsoever once things finally do stabilize on that front. It's likely that the stock will dip for a short time, but it's far more likely that people are going to see the value in being able to order all of their pet’s supplies online and have them delivered to their front door as opposed to driving from store to store and town to town in an attempt to find what they need. In short, Chewy has a solid business model and they know what they're doing. Even if the pandemic were taken completely out of the equation, there is every reason to assume that this company would continue to thrive because they offer a service that's both needed and wanted, regardless of what else is going on in the world.

The Future of Shopping

There's something else to be said for all of this. Up until the pandemic occurred, there was a rather significant group of people who had never really done a great deal of shopping online, nor did they have any intention of doing so. For the most part, it involved older individuals who were very much accustomed to doing their business in a face-to-face manner. Many of them didn't feel comfortable shopping online and as a result, they simply didn't do it. When the pandemic hit, they had no choice but to shop online because it wasn't always possible to get out and go to the store in order to get what they needed. It's also worth noting that the supply chain shortage that was going on at the exact same time also made it virtually impossible to find the items that were needed. Even people who could get out and go to the shops were getting frustrated with the situation because those shops rarely had the items that they needed for their pets. In both cases, the answer was to turn to a company that was capable of providing these products through online shopping, offering a safer, more convenient and more trustworthy experience. Chewy checked all the boxes and that more or less solidified the company in the minds of countless numbers of shoppers who had simply never considered utilizing them with any regularity before. Once you have discovered the simplicity of shopping online and having something delivered to you as opposed to having to take time out of your day to go get it, the whole idea of shopping in that manner becomes a lot more appealing. By the same token, anyone who has ever spent an entire afternoon driving to five or six different shops in two or three different counties in order to find a specific dog food (because their dog can't eat anything else) knows how convenient it is to be able to go online, make that purchase and forget about it. Why would anyone who has had these types of experiences want to go back to doing things the way they were doing them before? All of this means that Chewy stock is likely to go up.

A Solid Performer for the Long-Term

The thing that genuinely makes Chewy stock different from so many other stock options out there is that they are able to capitalize on the events surrounding the pandemic, yet they still have a plan that is rock solid well beyond that point. Granted, their stock has been in a bit of a downward trend lately, as previously mentioned. However, that only means that it's an excellent time to buy because you can buy the stock for a little bit less right now than you otherwise would have been spending. When it's all said and done, it comes down to the fact that this is a stock that is likely to perform well in the long run because they provide services that tens of thousands of pet owners need on a continuous basis. Pet owners are always going to need more dog food. They're always going to be buying new toys for their pets. They're always going to need to have prescriptions for their pets filled. And with this recent addition into health and wellness for pets, there's an even bigger chance that people will be ordering and reordering on a continued basis. All of that spells good things for people that decide to buy the stock as a long-term option. It's highly likely that this stock will continue to go up. Whether you decide to hold on to your shares for the next year or the next five years, there's a very good chance that you will end up being able to sell your shares for far more than you will pay for them if you buy them today. That makes Chewy one of the best long-term stock options to come along in quite some time.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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