Growth stocks can present excellent opportunities to build a portfolio over a long investment horizon. But after three-plus years of the stock market climbing higher, propelled primarily by growth stocks, many of the top companies appear overpriced. While growth stock investors are usually less concerned with price than with growth potential, valuation still matters.
But for those willing to dig into individual companies, there are still many great growth stocks trading at fair or even better valuations. One stock, in particular, looks like a no-brainer opportunity, and you can buy shares for less than $50 right now. Here’s why investors should take a closer look at Chewy (NYSE: CHWY).
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
If you have a pet, you probably know about Chewy. It’s the leading e-commerce provider for pet supplies. What makes Chewy such an attractive business is its customer loyalty.
It sports a net sales retention rate greater than 100%. That means all the customers it signs up in one year end up spending more the next year and even more the year after that. The company’s oldest cohorts, who started buying from Chewy in the early 2010s, now spend over $1,000 per year with the pet supply retailer.
That growth is supported by its Autoship program, which accounted for 84% of its sales in the third quarter of 2025. With such a large percentage of sales coming from the recurring shipment program, Chewy can predict sales, manage inventory, and reduce shipping expenses, leading to higher operating margins over time. It produced a 5.4% adjusted EBITDA margin over the trailing 12 months, and management’s targeting a 10% margin over the long run.
Chewy’s recent push into pet healthcare, insurance, and advertising should support margin expansion. All three tie in well with its core retail operations, with the opportunity to ship prescription medications alongside toys and treats every month, leading to higher-margin sales without a significant increase in operating expenses for the retail business. The integration should further strengthen customer loyalty, improving its net revenue retention rates.
Chewy continues to bring in new customers while increasing the spending of its older customers across its growing portfolio of services, anchored by its online retail operations. That should produce solid revenue growth in the high single digits. But with consistent improvements in its operating margin, its earnings are set to grow much faster. Analysts expect 23% earnings-per-share growth this year.
