Buying stocks that are down significantly from their highs can be unnerving. These are stocks that are likely facing some adversity or that were perhaps overvalued and have come down in price. But the risk and concern is that they’ll continue falling lower. If you’re investing for the long term, however, having patience with these types of stocks can pay off.
Chewy (NYSE: CHWY) is an online retailer that sells pet food, toys, and supplies. Given the nature of its business, it relies on a mix of both essential and discretionary spending from pet owners. But amid concern about long-term growth, investors have been bearish on the stock in recent years, and it’s now down around 47% from its 52-week high of $48.62.
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Is the stock in danger of going even lower, or could this be an opportune time to add Chewy to your portfolio?
Last week, Chewy reported its fourth-quarter and year-end results for fiscal 2025 (which ended on Feb. 1). It was a solid performance for the company as it wrapped up the year with its net sales rising by more than 6%, totaling $12.6 billion. Its operating income also more than doubled, going from $112.6 million in 2024 to $254.3 million this past year.
What’s also encouraging is that for the current fiscal year, it projects revenue to rise by around 8% or more, with it forecasting its top line to be between $13.6 billion and $13.75 billion, which is slightly higher than analyst expectations. This growth is even without relying on price inflation, as the company has been experiencing an increase in the number of active customers.
It’s been a rough start to 2026 as shares of Chewy are down 21%, which is worse than the S&P 500‘s decline of 7% thus far. But with some solid growth and revenue expected to rise at an even faster pace this year, there’s reason to be bullish about the stock, especially since it’s not relying on price hikes for the added growth.
The stock is trading at a forward price-to-earnings multiple of just 17, which is based on analyst expectations. By comparison, the average stock on the S&P 500 trades at more than 20 times its estimated future earnings. Chewy’s stock looks cheap, and it makes for an attractive buy right now as its business is proving to be relatively resilient these days. It has the potential to be a great pick up for long-term investors.
