Chewy $CHWY - Is the largest US Pet retailer worth a nibble?
Playing the pet economy & a Deep-dive on Chewy $CHWY
I spent several months in South America recently and then some time with family and friends in the US. That turned out to be a great research ground for one of the themes I have been wanting to look into in detail for a while - Pets!
Not being a “Pet person” (yes, I am the minority) - I have been surprised at how MANY people have pets around me (well, almost everyone I know) and how MUCH they spend on them each year! And this observation got even more pronounced while I was in South America and US. Then I started looking up some data: 60-70% of the households in the US and Canada own pets while that number goes to nearly 80% in countries like Argentina!!!
What followed was numerous interviews with pet owners and small businesses channel checks to start getting into the weeds of how to play this as an investment theme.
Now the Pet economy growth trend isn’t new - but I never really got around to researching it as deeply before. In my checks, one name kept coming up over and over apart from Amazon AMZN 0.00%↑ - Chewy CHWY 0.00%↑ . And then, just last week, as I was running through my “beaten down” names watchlist, Chewy CHWY 0.00%↑ came up making all time lows.
And that led to this deep-dive note as I was running the numbers on Chewy. I wanted to assess two things:
With sustained growth in the US Pet care industry over the last decade, is there still room for the industry to grow comfortably over the next 5-7 years?
If answer to the first question is yes, is Chewy CHWY 0.00%↑ the best way to play this growth trend? We review this in a stock deep-dive here covering business overview & growth drivers, risks and valuation scenarios.